The Australian Securities and Investments Commission (ASIC) recently published a report on insurance inside superannuation, with a review of 47 superannuation trustees. The review was focused on insurance claims and complaints handling, insurance disclosures, rebates paid to superannuation funds by insurers, and default categories with higher premiums.
Concerns were raised regarding poor complaints handling and auto-defaults as smokers. Complaints handling timeframes and practices were found lacking, with about a third of trustees examined taking more than three months on average to resolve complaints regarding insurance.
Trustees in some cases were defaulting members as smokers when doing transfers to different parts of the same fund, which results in higher premiums. Trustees have all agreed to cease this practice.
In the pipeline are more robust internal dispute resolution requirements for superannuation trustees with the launch of the Australian Financial Complaints Authority launch in November.
A voluntary code of practice was released almost a year ago, however ASIC says the super industry still has ‘significant weaknesses’ and a lot of variances in insurance definitions, for example, in products offered to superannuation funds. This leaves consumers without adequate means for comparison.