The group life industry is supporting the Australian Prudential Regulation Authority (APRA) move for super funds to have an insurance strategy.

APRA wants super funds to develop and implement a strategy that considers the type and default levels of insurance.

This strategy would also define the process for selecting an insurer and monitoring its performance.

The trustees would also have to demonstrate that any insurance benefits were in fund members’ best interests, especially the needs of beneficiaries.

In its response to the APRA paper on prudential standards for super funds, insurers asked the regulator not take an overly prescriptive approach in setting minimum requirements of the insurance strategy.

APRA proposes to introduce specific insurance strategy requirements for a fund. However, APRA will give trustees sufficient flexibility to set members’ cover based on a whole-of-fund approach or at specific membership levels or requirements.

The new rules covering insurance are expected to be finalised in May when APRA publishes the new prudential standards for super funds.

The regulator aims to implement the standards from July 1 2013.