Trustees urged to improve life insurance offerings

23 March 2023
| By Laura Dew |
image
image
expand image

Superannuation trustees need to improve their life insurance offering for members following a review by the Australian Securities and Investments Commission (ASIC).

The regulator undertook a review of 15 super trustees from a broad cross-section of fund types to identify whether funds could achieve better member outcomes by enhancing their life insurance arrangements following an earlier review in 2019.

This included ensuring they had robust systems, processes, and controls to effectively administer their insurance arrangements as well as reforms from the design and distribution obligations (DDO).

While ASIC identified some trustees had shown progress in their insurance offering, this was “not necessarily consistent” across the industry and trustees had not made “sufficient effort in all areas”.

It found:

  • Many trustees had made changes to the design of their insurance arrangements to better meet member needs and provide value for money, such as by changing restrictive ‘total and permanent disability’ definitions.
  • Many trustees had worked with their insurers to streamline their claims processes to make them easier for members to navigate and taken steps to enhance their oversight of insurers’ claims handling practices.
  • Some trustees had improved the way they explained their insurance offerings to make it easier for members to understand their insurance and make appropriate decisions for their circumstances.

ASIC commissioner, Danielle Press, said: “Insurance in superannuation provides a built-in safety net for millions of [Australians]. Superannuation trustees play a central role in deciding what life insurance is made available to their members and how it is provided.

“Whether it is default or optional insurance, we want fund members to have confidence that they are receiving value for the insurance they hold through their super and that they will be able to claim on it when they need to.

“I strongly encourage all trustees to commit to a thorough analysis of their insurance arrangements using the information and action points in ASIC’s report to identify where they fall short and address any gaps. Life insurers also need to play their part by working collaboratively with trustees to implement any improvements.”

The regulator had written to the trustees involved to provide feedback and also recommended key actions for trustees to make improvements.
 

Read more about:

AUTHOR

Submitted by B Real on Thu, 03/23/2023 - 13:21

So legislation weakens insurance for super fund members, many are excluded by age and account balance limits, advisers are totally excluded from providing education and assistance through 'intra-fund' advice, the insurers lose revenue and therefore profitability and potentially sustainability, then ASIC says they have to do better?
How can you expect anyone to do better when it is legislated that they have so many hurdles to jump, lower revenues, increased admin costs etc.....

Add new comment

The content of this field is kept private and will not be shown publicly.

Recommended for you

sidebar subscription

Never miss the latest developments in Super Review! Anytime, Anywhere!

Grant Banner

From my perspective, 40- 50% of people are likely going to be deeply unhappy about how long they actually live. ...

3 months 2 weeks ago
Kevin Gorman

Super director remuneration ...

3 months 3 weeks ago
Anthony Asher

No doubt true, but most of it is still because over 45’s have been upgrading their houses with 30 year mortgages. Money ...

3 months 3 weeks ago

Financial stability continues to be closely linked to the contentment of older Australians, according to new data from Challenger. ...

12 hours ago

There is growing support from the Senate crossbench for the government to rethink its plans to tax unrealised gains in the proposed $3 million super tax....

14 hours ago

The $27 billion fund has named a successor for long-term board member David Smith, who is set to step down after more than a decade....

1 day 12 hours ago

TOP PERFORMING FUNDS

ACS FIXED INT - AUSTRALIA/GLOBAL BOND