APRA flags insurance inside super approach

The Australian Prudential Regulation Authority (APRA) has confirmed that it will be finalising its approach to insurance inside superannuation in the next three months ahead of implementation next year.

The regulator has outlined the timing in an interim update to its policy priorities issued on Friday.

APRA in March said that it had written to life insurers and superannuation funds urging them to address what it described as “concerning trends and practices in the provision of insurance to superannuation members”.

It said it had noted significant deterioration in group life insurance claims experience in 2019 and 2020 with “the potential for the re-emergence of unpredictability and volatility in insurance premiums”.

“APRA is concerned that, if the observed trends and practices continue, members are likely to be adversely affected by further substantial increases in insurance premiums and/or reductions in the value and quality of life insurance offered through superannuation. “

“APRA expects life insurers and superannuation funds to take steps to ensure that insurance offerings and benefits are sustainably designed and priced, provide appropriate value for members, and adequately reflect the underlying risks.”