ASIC has urged the superannuation industry to focus on improving consumer outcomes in relation to life insurance provided through superannuation, following the release of its report on progress in this area.
Its report, Insurance in superannuation: Industry implementation of the Voluntary Code of Practice, comments on industry’s implementation of the Insurance in Superannuation Voluntary Code of Practice (Code).
It also provides context about why a focus on insurance in superannuation, held by approximately 12 million Australians, is important.
ASIC Commissioner, Danielle Press, says, “We recognise that there is significant change occurring in relation to insurance in superannuation. In this dynamic phase, it is important that superannuation trustees remain focused and committed to improving outcomes for members.”
The Code sets standards of practice with the aim of improving:
- Industry practices in benefit design
- Claims handling
- Communications to members
The regulator stated 70 percent of superannuation trustees are adopting the Code in whole or part but full implementation is not due for completion until 30 June 2021.
The report notes that some improvements in practices are being introduced as a result of adoption of the Code by a significant number of trustees.
However, it stated further work needs to be done to achieve the high industry standards consumers expect.
“We identified a number of inconsistencies in implementation of the Code, some relating to fundamental aspects such as which members are covered by the Code, the controls around balance erosion, and calculation of timeframes for claims processes,” Press said.
“Also, trustees are continuing to leave vulnerable members behind – they need to have better defined policies and processes for those with unique needs.”
ASIC’s report follows the release of a report in October 2019, Holes in the safety net: a review of TPD insurance claims, which focused on total and permanent disability insurance, much of which is held through superannuation.
Click here to view the full report.
You get what you pay for.
It is a high order to demand better outcomes for Australians while promoting cheaper premiums.
Life Companies are saying they are losing money, so the solution is either higher premiums so Australians can attain better policy terms, or further reduce and restrict the benefits to stem the losses.
The obvious sting in the tail, is if a family has a large mortgage, the amounts paid via Industry and group policies, are always too low and the family lose their home any way.
That is the purpose of having an adviser channel, who are able to take up the slack and make sure that those families have sufficient Insurance so they can keep their assets.
ASIC state they recognise there is significant changes in this dynamic phase.
What does that mean?
Does ASIC understand that they were a major player in the current fiasco we now face and the harder they make it to do Business, the less inclined Businesses are willing to participate, with the end result being NIL Best Interest Duty, due to what is now occurring, which is a diminishing and eventual collapse of the Retail Life Insurance Industry.
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