Lack of data hindering group insurers
A continual lack of quality data from superannuation trustees is impeding the group insurance market, a survey by the prudential regulator has found.
APRA has released the results of a survey of insurers and reinsurers that highlights "key themes in relation to the poor experience in the group insurance market".
The prudential regulator released a prudential practice guide for superannuation trustees involved in group insurance in October 2014.
Prudential Practice Guide LPG 270 Group Insurance Arrangements stemmed from an APRA survey of the group insurance market that was conducted throughout 2014.
APRA has now released the results of the survey, which it says it will be discussing with each group insurer throughout the “coming months”.
In regards to insurance data, APRA acknowledged that the level of data available to insurers has often been inadequate and "of poor quality" in the past.
Insurers also face challenges in obtaining 'enhanced' data due to "varying levels of trustee maturity in either systems or processes", APRA said.
"APRA’s observation from responses received from insurers is that the impact of poor data tends to increase over time," said the regulator.
"Insurers have responded to the issue, and now appear increasingly to be including data quality requirements as conditions in tenders.
"This includes the ongoing right to audit data post-appointment and retaining the right to adjust the pricing should the audit identify significant discrepancies in the data used for the tender," it said.
When it comes to tenders for superannuation group insurance business, there is a "general unwillingness" on the part of insurers to participate if "deadlines do not allow sufficient time for thorough analysis".
As a result, the deadlines for group insurance tenders have lengthened, said APRA.
Certain insurers will decline to quote new business if reinsurance is not available at the time of tender, and some reinsurers are no longer tendering for new total, permanent and disability business, said the regulator.
"Most insurers reported increased rigour in checking and validating externally sourced data provided with a tender.
"In addition, some insurers advised that they retain a right to audit data after the contract commences and [to] adjust pricing if necessary. One direct insurer reported that it now asks for at least 10 years of data for tenders," APRA said.
Online ‘dating’ app launched to find perfect planner
The FPA has launched a dating app style service to match Australians with a plan...
BDO partners with Nod
BDO has partnered with Nod to deliver better and more efficient statement of adv...
Super funds closer to forming investment giant
VicSuper and First State Super are one step closer to consolidating, with a lead...