Earlier this month, APRA responded to questions on notice from Senate economic references committee chair and Labor senator Alex Gallacher around whether 42 per cent premium increases to CommInsure products within the Colonial Super Retirement Fund constituted a breach of the fund trustee’s duty to act in members’ best interest.
The fund had hiked fees from $5,494 to $7,804 per year for $500,000 worth of cover and entered into a further three year contract with CommInsure, which Mr Gallacher pointed out was a “related entity” to the fund.
The matter had originally been raised with ASIC in an October hearing of the House economics committee, after which the corporate regulator had informed the committee that APRA had primary responsibility for investigating trustee breaches.
Responding to Mr Gallacher’s questions, the prudential regulator said it did not “review in detail the outcome of every group insurance tender”.
“There are many drivers of premiums for group insurance arrangements, including membership coverage and demographics, claims experience, the nature and type of cover provided and policy terms and conditions,” APRA said.
“There have been changes in many of these drivers in recent years, requiring changes in premiums to appropriately reflect the underlying cost of the insurance.”
The regulator said changes to the SIS Act excluding younger super members from group insurance had also had a significant impact on premium prices across the sector.
APRA said when agreeing terms with group insurers, trustees needed to “balance potentially competing considerations in determining their insurance arrangements, so that levels of cover and terms and conditions are set such that the outcomes for members are broadly appropriate”.
“However, in recent years insurers have experienced losses on their group insurance portfolios, and continued losses could put the ongoing provision of sustainable group insurance at risk,” the regulator said.
“The factors outlined above will have contributed to the increase in premium indicated in the example provided, which is within the range of premium increases that APRA has observed recently across the superannuation industry”.
what a joke, how is anything above 10% with in the range of normal increases… LIF was meant to take comissions away from advisers that do a great job to make the insurance premiums for the consumer more affordable. these days most people cant afford the cover as the hikes between 40-80% annually on level premium cover prevents them holding it long term. The only winner with LIF is the insurer…. Its not the ocnsumers fault or the advisers fault that your actuaries are greedy and cant get shit right. the pandemic and mental health are the reason you are losing money and yes we are fed up listening to you whinge cause we are the ones that have copped all of the changes……banking royal commission should be renamed to Financial adviser beat up, we are the only losers…..
Dear Senator Gallacher. In August 2019, the premium for my Care Super life & TPD cover of $264,890 increased from $249.69 per month to $436.69 or approximately 75% which is a bit more than 42%. I’m sure you are familiar with Care Super. Just wondering how this significant increase was in my best interests. Perhaps you could look into this issue as well. Thanks in anticipation.
Perhaps our Labor Senators etc should look at their mates running the industry superfunds and query likewise re their insurance premium increases…..wont happen, due to their financial dependency on these funds for their political parties survival !!
Good to see at least one regulator isn’t beholden to union super and their ALP puppets.
Maybe the government needs to transfer some APRA personnel to ASIC, to clean out ASIC’s biased brigade and overhaul their toxic culture.
They are beholden to large corporations instead. The life insurance industry in Australia is broken — whether through industry super or retail. ASIC have almost achieved their goal and in 12 months they will have done so when financial planning is all done via general advice through the big 4 banks and union super funds.