In its latest report on the provision of insurance cover through superannuation, the Australian Securities and Investments Commission (ASIC) has noted that considerable work still needs to be done to raise industry standards.
ASIC’s review of 47 superannuation trustees revealed poor complaints-handling timeframes and practices as a major concern, with nearly a third of trustees in the review taking more than 90 days on average to resolve complaints about insurance in 2017-2018.
Another concerning finding was some trustees were still automatically defaulting members as “smokers” when transferring them to different sections of the same fund, resulting in higher insurance premiums payable by those members.
“In the coming months, ASIC will be focused on ensuring that members do not experience adverse outcomes arising from poor complaints handling or inappropriate defaults,” said Peter Kell, ASIC deputy chair. “It is essential that trustees meet their obligations to deal with consumer complaints about superannuation in a timely manner and provide reasons for decisions as required.”
The corporate watchdog said it will be consulting on stronger internal dispute-resolution requirements for superannuation, to make the super fund’s complaints-handling performance more transparent. The consultation will take place after the Australian Financial Complains Authority commences operations in November.
The Insurance in Superannuation report also cites actions trustees should take to achieve better outcomes for members who acquire life insurance coverage through superannuation funds.
The ASIC report focused on insurance claims and complaints handling, disclosures about insurance (including about cover ceasing), insurer rebates paid to trustees, and whether members were defaulted into demographic categories that resulted in higher premiums.'