The pricing of group life insurance is coming under increased scrutiny by the Australian Prudential Regulation Authority (APRA).

Speaking at the Financial Services Council Life Insurance Conference in Sydney last week, APRA Executive Member Ian Laughlin said the expansion of the group life market has created some problems.

“We are concerned poor data from the funds is being used for pricing in competitive insurance tenders,” he said.

“There is also a decline in the skill base to deal with claims, so we are seeing some poor claims experiences.

“The (group life) industry must do better.”

Mr Laughlin says there must be actuarial reviews of pricing in tenders and the regulator has explained this to actuaries working in the group life industry.

“We will be visiting group life companies this year and will be publishing a set of prudential standards for super that will cover life insurance,” he said.

“We will also looking at the data available to enable robust pricing for tenders.”

Mr Laughlin says APRA will be looking for “significant improvement” in the group life industry during the next 12 months.