The Australian Prudential Regulation Authority (APRA) is urging life insurers and registrable superannuation entity (RSE) licensees to address concerning trends and practices impacting the sustainability of insurance provided to superannuation members.
APRA found dramatic deterioration in group life insurance claims experience in 2019 and 2020, resulting in insurance premiums that are unpredictable and volatile. The regulator claimed that the persistence of observed trends and practices could cause further increases in insurance premiums or reductions in the value and quality of life insurance offered through superannuation.
As a result, the regulator urges life insurers and superannuation funds to ensure that insurance offerings and benefits are sustainably designed and priced, provide appropriate value for members, and adequately reflect the underlying risks.
“For most people, the life insurance they receive through their super fund is the only cover they have to protect themselves and their family,” APRA deputy chair Helen Rowell wrote in a letter to life insurers and superannuation funds.
“It's critical that these issues are addressed, so sustainable and affordable insurance is available to members through their superannuation fund over the medium- to long-term,” she continued.
APRA has identified the need for:
“APRA will continue to engage closely with life insurers and superannuation trustees to monitor their progress as they respond to these issues, with a focus on the interests of current and future superannuation members,” Rowell concluded.
