The Australian Prudential Regulation Authority has released for consultation proposed revisions to Prudential Standard SPS 250 Insurance in Superannuation.
In a release earlier this week, APRA stated that the proposed changes are aimed at improving superannuation member outcomes by helping trustees select the most appropriate insurance policies for their members, and monitor their ongoing relationships with insurers.
The consultation follows the release in April of APRA‘s Post-Implementation review of the superannuation prudential framework.
The regulator stated its proposed changes also respond to two of the recommendations from the Royal Commission Final Report.
The proposed revisions, outlined in a letter to industry, will require:
- A process that enables beneficiaries to easily opt-out of insurance cover
- That the level and type of insurance cover not inappropriately erode the retirement income of beneficiaries
- That any status attributed to a beneficiary in connection with the provision of insurance is fair and reasonable (Royal Commission Recommendation 4.15)
- Independent certification that insurance arrangements are in the best interests of beneficiaries (Royal Commission Recommendation 4.14)
APRA’s consultation will close on 3 February 2020 and it will finalise the prudential standard by mid-2020, with the revised standard coming into effect on 1 January 2021.
Click here to view the letter outlining the proposed revisions and the draft prudential standard.
Most of the statements made, contradict themselves.
As usual, people with little or nil experience regarding Insurance and it’s purpose, make ridiculous, inane suggestions that fail virtually every requirement and need that Insurance provides.
I am continually amazed at how weak the Life Insurance Company representative bodies, such as the FSC are, when it comes to challenging any suggestions or new regulations affecting the provision and availability of Life and Disability Insurances.
We are now hearing of many cases where people under 25 that had their Insurances cancelled under the “improved system” and have suffered devastating illnesses and disabilities, only to find that in the old system, they would have received substantial Insurance payouts and now they are getting NIL.
The Life Insurance Industry should have said right from the start, that if the Government insists on that course of action, then the Government will take over that financial responsibility and pay the hundreds of millions of dollars to those affected people.
The Government would have reeled back in horror and said that is not the function of Government, at which point, the Life Companies should have pressed home their case.
Instead, we watched them do and say little to prevent what is now transpiring.
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