Super trustees must focus on a fund’s life insurance component and cannot rely on external advisers, CommInsure GM Wholesale Life Claire Roberts has warned.

“There is no right or wrong when looking at the insurance component of a fund,” she told an Association of Superannuation Funds of Australia conference in Sydney last week.

“The trustees have to think about the demographics of the fund members and that there is not one solution. They can not outsource responsibility for insurance.”

Trustees should focus on the long-term performance of cover, such as claims experience and costs borne by the fund.

“It is not simply a case of transferring the risk to the insurer,” she said. “The fund needs both short and long-term sustainability of the insurance [contract in the fund].”

They should also consider the structure of an insurance contract and how it works with claims footprints.

“It is about the design of the insurance and its impact on the members of the fund,” Ms Roberts said.

In large funds the insurance contract is probably the biggest financial contract, she says. It requires an internal team that understands what the contract provides for members.

“It is not about outsourcing the insurance component of a fund – the trustees need to be involved.”