The Australian Prudential Regulation Authority (APRA) has warned super trustees it will treat each insurance framework application on its own merits.

Trustees must register insurance management frameworks as part of the Stronger Super regulations.

“We will look at the size and complexity of the insurance business when we look at approving the framework,” APRA Supervisory Support Division GM Greg Brunner told an Australian Institute of Superannuation Trustees insurance symposium in Melbourne.

“It will not be one size fits all.”

Mr Brunner also says frameworks should feature a process for “reviews and renewal of insurance arrangements” on a regular basis.

“In the framework we will expect the fund to explain how it will select an insurer.”

Trustees must also ensure their insurance contracts meet the new legislation, because registering a framework means the document is immediately active, according to Holding Redlich Partner Jenny Willcocks.

“This means the framework can apply sooner than the July 1 2013 date [when the Stronger Super regulations take effect],” she told the symposium.

“Funds will have to make sure the insurance policy meets the standards laid down by APRA.”

These include meeting the best interests of members, arms-length dealings with suppliers and agreements and monitoring processes.

Ms Willcocks says funds should rethink how they handle the insurance component of their organisation.

“Insurance is now on the same level of reporting and administration as investments in super funds,” she said. “Funds can no longer set and forget the insurance component of their operations. The insurance contract will have to be managed.”

Before creating a framework, trustees must consider the philosophy behind their insurance offerings, MLC Head of Business Development Stephen Hall says.

“We need to take a step back from the framework,” he told the symposium. “We are telling trustees to start talking about the philosophy of their insurance in the fund.”

Mr Hall says trustees should be able to explain the philosophy behind their insurance offering to regulators.

“It is about the risk factor,” he said. “Consider that before building the framework.”