Home / Life Insurance / ASIC urges care over how they explain opting-in
4 November 2019
The Australian Securities and Investments Commission (ASIC) is urging super funds to improve their communication to members about the Putting Members First bill on opt-in insurance in super.
The regulator says in a letter that super funds writing to members about the changes are expected to tailor their communications to the needs of their members, including using tailored language and a particular communication method.
It says they must provide balanced and factual communication with appropriate context about the reforms. The bill has made insurance opt-in for accounts with balances below $6000.
The super funds must write to members about the new arrangements by December 1. Opt-in arrangements will kick in from April 1 next year.
ASIC has also warned super funds not to create an impression that the only option for members is to retain insurance, or induce them to take a certain course of action. The member’s best interests should be the priority, it says.
Some communications about the Protecting Your Super (PYS) bill weren’t balanced when describing the available options, benefits and negatives, focusing on the potential loss of insurance without considering the benefits it would bring by stopping account balance erosion, ASIC says.
It says previous communication about the PYS changes also didn’t urge members to review if their insurance arrangements were appropriate for them, and some funds were treating the letter like a compliance exercise.
ASIC says trustees should segment their member base and plan different communications for each group, based on whether they are new entrants to the workforce, or if they work in dangerous jobs. Funds should also use multiple communication channels and provide appropriate resources to deal with enquiries.
Several recent industry surveys have shown that proper member engagement helped lift insurance retention rates when the PYS legislation was passed.
MLC Chief of Group and Retail Partners Sean McCormack says funds using multiple communication methods to reach members had the best results, and funds need to practice member segmentation to understand their different needs, demographics and communication preferences.
Consumer groups have been scathing of funds’ communication efforts and say funds need to inform members how insurance might meet their needs, rather than “scare them into taking up worthless cover”.