The Australian Prudential Regulation Authority (APRA) has finalised revisions to requirements and guidance relating to insurance in superannuation following two years of industry consultation.
APRA said the finalised works would fulfill recommendations 4.14 and 4.15 of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry and that it had now met all 10 recommendations that was directed to it.
The final revisions to Prudential Standard SPS 250 Insurance in Superannuation (SPS 250) and the accompanying Prudential Practice Guide SPG 250 Insurance in Superannuation (SPG 250) were aimed at ensuring better member outcomes through updated requirements for trustees to select, manage and monitor members’ insurance arrangements, said APRA.
The newly released paper confirmed that SPS 250 would require trustees to:
- Strengthen arrangements to protect members from potential adverse outcomes caused by conflicted life insurance arrangements – including robust decision-making in the negotiation and ongoing review of insurance arrangements;
- Obtain an independent certification of related party insurance arrangements before entering into, or materially altering, an insurance arrangement, and on a triennial basis; and
- Strengthen data management to improve analysis of member outcomes across different groups of super fund members.
APRA said: “Further, enhanced prudential guidance in SPG 250 would facilitate easy opt-out of insurance for members, and ensure premiums did not unduly erode members’ retirement incomes”.
The enhancements to SPS 250 would commence on 1 July, 2022.
APRA encouraged trustees to reassess their insurance arrangements and strategy, risk and compliance frameworks in preparation for this date.