Insurance brokers will lose their commission if they sell a policy to a superannuation fund, Treasury has confirmed to insuranceNEWS.com.au.

A situation could arise where a broker sells cover for a building that is held by a self-managed superannuation fund (SMSF).

Treasury told insuranceNEWS.com.au that while legislation is still to be drafted covering new rules on commissions within superannuation, the Government’s view on outlawing these payments hadn’t changed since the Cooper Review recommendations.

“The Government’s position on insurance commissions within superannuation is consistent with the Cooper Review recommendation 5.12 that up-front and trailing commission and similar payments should be prohibited in respect of any insurance offered to any superannuation entity, including self-managed superannuation funds, regardless of the rules on commissions that might apply outside superannuation,” a spokesman told insuranceNEWS.com.au.

In recent years, the Government has relaxed the rules on SMSFs borrowing, and this has led to a number of funds including properties as assets.

According to the Australian Taxation Office’s June 2010 figures, SMSFs hold $45.8 billion of non-residential property and $12.5 billion of residential property.   

They also hold $187 million of overseas-based properties and $518 million of artworks and other collectibles.

All these assets should be insured, as it is a duty of the fund’s trustees to protect its investments against loss.

But under the new decision, brokers will not be able to claim commission on the premiums.

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