The Australian Prudential and Regulatory Authority (APRA) has released a discussion paper containing guidance on the way it will regulate the new insurance requirements announced with the Stronger Super reforms.
As part of the Stronger Super proposal, trustees of a superannuation fund (either MySuper or ‘choice’) are required to develop and maintain an insurance strategy.
APRA proposes that, at a minimum, the strategy should include:
- Consideration of the types and default levels of insurance to be offered
- The process for selecting and monitoring an insurer
The discussion paper also sets out that, in developing the strategy, trustees would be required to demonstrate that any insurance products offered are in the best interests of the beneficiaries, having regard to the characteristics of the membership of the fund. This would include an assessment of the insurer, the insurance policy’s benefits and conditions and the cost effectiveness of the insurance coverage.
The regulator will also require trustees to identify ‘particular roles’ who will be responsible for maintaining the strategy, implementing and monitoring reporting requirements for insurance, and performing a periodic review of the insurance strategy.
Submissions on the proposals in the discussion paper are close on 23 December 2011.
