Superannuation funds which sit within vertically integrated structures which also deliver group insurance will need to certify that the arrangements are validly delivering best interests to members.
That is the bottom line of a consultation opened by the Australian Prudential Regulation Authority (APRA) dealing specifically with related party insurance arrangements in line with the recommendations of the Royal Commission.
Outlining the consultation around Prudential Standard SPS 250, APRA said superannuation fund licensees would need to provide independent certification that such arrangements were in the best interests of members.
It said a superannuation fund licensee would need to provide the independent certification to APRA within five business days of its receipt, and no later than one calendar month prior to the licensee entering into a new insurance arrangement or renewing an existing insurance arrangement.
“Where an insurance arrangement is for a term of, or exceeding, three years, the certification must be provided to APRA on a biennial basis,” the APRA consultation documentation said.
It said the changes addressed concerns highlighted by cases considered by the Royal Commission where members were adversely impacted by being inappropriately attributed with a particular insurance status under insurance arrangements.
The APRA consultation also proposes changes to make it easier for members to opt out of insurance cover.