The Australian Prudential Regulatory Authority (APRA) has echoed industry concerns that opt-in cover in superannuation will have a material effect on group life insurers.

In a letter to the Economics Legislation Committee, APRA says it is assessing potential short and medium-term impacts, taking industry input into account.

“Appropriate transitional arrangements that are well targeted may be required to enable the superannuation and life insurance industries to implement the measures in… a manner that minimises unintended consequences and adverse outcomes for members,” it says.

KPMG and AIA say the proposed changes fail to address the issue of retirement balance erosion.

APRA also wants to identify practical barriers to implementing the proposal within set timeframes. It says changes may be required by all super entities, working with their insurers, around the design, pricing and communication to members of insurance arrangements.