The Australian Prudential Regulation Authority has again warned the Senate committee considering group insurance opt-in that the proposals are likely to lift premiums.

Deputy Chairman Helen Rowell told the committee that, while the precise impact is difficult to assess, the removal of young and low-balance members from the default insurance pool, and the removal of inactive superannuation accounts, will create upward pressure.

Under the plans, inactive accounts will be transferred to the Tax Office, ending their insurance, while insurance will be opt-in only for members aged under 25 or with balances below $6000.

Super funds will need to contact members with inactive funds to warn them their cover will cease when balances are transferred to the Tax Office, Ms Rowell says.

Other members must be contacted so they can consider their insurance needs and the consequences of not opting in to cover, she says.

Ms Rowell also warns the complexity and extent of the group cover changes will make it difficult to implement them by July next year.

Insurance arrangements will need to be reviewed and repriced. Underwriting processes will need to be reviewed and contractual arrangements renegotiated.

This will cause heightened operational risk for insurers and administrators if insufficient time is given to implement changes. Ms Rowell says the Senate committee should discuss transition options with key stakeholders.