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18-261MR ASIC reviews insurance in superannuation
The Australian Securities and Investments Commission (ASIC) has released a report on the provision of insurance cover through superannuation.
ASIC’s review of 47 superannuation trustees focused on:
- insurance claims and complaints handling,
- disclosures about insurance (including about cover ceasing),
- insurer rebates paid to trustees, and
- whether members were defaulted into demographic categories that resulted in higher premiums.
Findings of concern included:
- poor complaints-handling timeframes and practices, as almost a third of trustees in the review took more than 90 days on average to resolve complaints about insurance in 2017-2018
- some trustees were still automatically defaulting members as ‘smokers’ when transferring them to different sections of the same fund, resulting in higher insurance premiums payable by those members. All trustees have agreed to discontinue this practice.
ASIC Deputy Chair, Peter Kell, said that while some improvements were being introduced by trustees, there was considerable work to do to raise standards in the areas covered by the review.
‘In the coming months, ASIC will be focused on ensuring that members do not experience adverse outcomes arising from poor complaints handling or inappropriate defaults. It is essential that trustees meet their obligations to deal with consumer complaints about superannuation in a timely manner and provide reasons for decisions as required,’ said Mr Kell.
ASIC will be consulting on stronger internal dispute resolution requirements for superannuation after the Australian Financial Complaints Authority commences operations in November. This will require greater transparency about complaints handling performance by superannuation funds.
In addition to the results of the review, the Insurance in Superannuation Report sets out actions trustees should take to achieve better outcomes for members who acquire life insurance coverage through their superannuation funds.
ASIC notes that there has been heightened industry focus on the life insurance industry and insurance in superannuation - as evidenced, for example, by the Insurance in Superannuation Voluntary Code of Practice and the law reforms set out in the Government’s Protecting Your Super Package.
Read Report 591 Insurance in Superannuation (REP 591)
ASIC's MoneySmart website has information for consumers about the types of life insurance available through super and the pros and cons of this type of insurance. MoneySmart also includes information about making a claim and what consumers can do if they’re unhappy with their super fund's claims process.