The Australian Prudential Regulation Authority (APRA) has released for consultation proposed revisions to Prudential Standard (SPS 250) Insurance in Superannuation.
The proposed changes are aimed at improving superannuation member outcomes by helping trustees select the most appropriate policies for their members, and monitor their ongoing relationships with insurers.
APRA’s decision to update SPS 250 follows the release in April of APRA’s Post-Implementation review of the superannuation prudential framework. The review recommended enhancements to APRA’s requirements and guidance on the strategy, design and selection of insurers, and how these affect member outcomes.
APRA’s proposed changes also respond to two of the recommendations from the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry Final Report (the Royal Commission).
The proposed revisions, outlined today in a letter to industry, will require:
- a process that enables beneficiaries to easily opt-out of insurance cover;
- that the level and type of insurance cover not inappropriately erode the retirement income of beneficiaries;
- that any status attributed to a beneficiary in connection with the provision of insurance is fair and reasonable (Royal Commission Recommendation 4.15); and
- independent certification that insurance arrangements are in the best interests of beneficiaries (Royal Commission Recommendation 4.14).
The consultation closes on 1 February 2020 and APRA will finalise the prudential standard by mid-2020. The revised standard will come into effect on 1 January 2021.
Insights from the consultation will also form the basis of a revised Prudential Practice Guide (SPG 250) Insurance in Superannuation, which APRA will consult on early next year.
The letter outlining the proposed revisions and the draft prudential standard are available at: Consultation on Prudential Standard SPS 250 Insurance in Superannuation.