The Association of Financial Advisers (AFA) has questioned the lack of rules on handling group life insurance claims.

In a submission to the Productivity Commission’s study of competition in superannuation, the AFA says there are no set standards for trustees or their insurers.

“Some trustees play the role of facilitator, while others are less involved,” it says.

“Some trustees have outstanding claims outcomes for their members, such as Sunsuper, which recently embedded claims managers from its preferred insurer in its offices.”

The AFA says this model means claims are handled quickly, with more interaction between member and insurer. This leads to efficiencies in claims management.

But the association accepts this could lead to high premiums and dent members’ account balances.

“We consider that the differences in how claims are managed among group policies is inefficient,” the submission says.

“A lack of transparency on how claims are handled affects competition when super members and their advisers try to assess the differences between funds.

“This inhibits competition within the system and can lead to suboptimal satisfaction among members when their expectations are not met at claim time.”

The AFA wants standards that “mean when super funds make a commercial decision to change insurers… the end consumer will be less adversely affected. They will also have more certainty as to how their access to insurance benefits will be treated.”