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APRA urges super funds to back code

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The Australian Prudential Regulation Authority (APRA) has urged superannuation fund trustees to sign up to the Life Insurance Code of Practice.

Deputy Chairman Helen Rowell says trustees should “review their insurance arrangements against its provisions – and where possible do so more quickly than envisaged by the relatively lengthy timeline for implementation”.

“We would also encourage trustees to think about where you should go further than the minimum provisions set out in the code, with a view to further enhancing the outcomes being delivered to members,” she told a Law Council of Australia event in Canberra last week.

Ms Rowell says the code, developed by the Insurance in Superannuation Working Group, is an important step forward.

“There is clearly potential for future, improved iterations of the code, building upon the work done so far, and we look forward to seeing the industry commit to tackling this challenge.”

APRA wants enforceability and oversight of the code strengthened and suggests improvements clarifying and standardising definitions for disability insurance, while dealing with multiple accounts and the cover provided.

Ms Rowell wants “fuller reconsideration of the role and level of default insurance through MySuper, consistent with the objective of MySuper products being simple, comparable and low cost. Also the obligation of trustees to ensure there is not undue erosion of members’ retirement benefits.”

APRA is examining how trustees can improve outcomes for members in a number of areas such as life insurance.

The regulator will look at how funds achieve this through relevant benchmarks.

“However, individual funds have different members and different strategies, and the scope and nature of trustees’ business operations varies,” Ms Rowell said.

“So different trustees will have different outcomes they are seeking to deliver; hence the benchmarks and measures that are used for their assessments are also likely to vary. This is not a one-size-fits-all measure.”