The Australian Prudential Regulation Authority (APRA) is continuing to work with group life insurers to improve governance in the sector, says Executive Member Ian Laughlin.

Speaking at the Financial Services Council conference on the Gold Coast last week, he said the regulator has concerns about the intense competition for mandates.

“We have concerns on governance and data management in the sector,” Mr Laughlin said.

“We want to make sure boards and senior management have an overview of the business being written and they are satisfied with it.”

He says APRA is also concerned about the impact disability claims and morbidity will have on group insurers’ profitability.

“We have seen poor pricing and tendering in group life,” he said. “There is poor data [from the super funds] being used for pricing.”

TAL MD Jim Minto told the conference his company had discovered three occasions this year when group insurance tenders were based on significant errors in data.

In one case new data had to be generated for the tender because of the unreliability of the provided figures.

“We have seen inconsistent data with a lack of claims experience,” he said.

“This can produce an outcome that is widely different from what you are expected to bid on.”

Mr Minto says another concern is that some funds expect the issuer to sign an indemnity agreement accepting some figures could be incorrect.

“Can the insurer afford to take the risk when they don’t know what risks they are pricing?”

Mr Minto says there have been moves to improve the quality of data with talks between the insurers and the super funds, but these have failed to reach any agreement.

“We all need to pull together and set the standards for insurance data in group,” he said.

“It is a challenge for our industry.”