In this newsletter we review APRA’s quarterly statistics for the December quarter on the profitability of the superannuation insurance sector at an aggregate and a product level, as well as explore the regulators upcoming focus.
Profits for Superannuation Group Risk Products continued at significantly reduced levels in the December quarter, ($235m profits in the first half of 2016 compared to only $81m in the second half of 2016), due primarily to Group Lump Sum.
Superannuation Group Lump Sum profits continued at reduced levels, last seen in 2014. Profits significantly reduced from $281m in the first half of 2016, to $25m in the second half of 2016.
Superannuation Group Disability Income reported the highest profits for the past 10 quarters at $43m, predominately due to a reduction in reserves.
ASIC has confirmed it will shortly be issuing notices to nearly 50 trustees, asking them questions about their insurance arrangements including time frames for claims and complaint resolution and details about incentives such as premium rebates that may be available to the trustees by insurers. In addition, ASIC expects that a small number of trustees will be selected for more detailed review once they have analysed the responses to the initial notice.
ASIC has also indicated that it is pleased to see the establishment of a Superannuation Industry Working Group to consider the development of a code for life insurance in superannuation. ASIC’s view is that it is important that consumers can expect substantially the same standards to apply whether they hold life insurance inside or outside of superannuation.
In the newsletter we have outlined various actions super funds should be undertaking to address the above points.
Our superannuation system has an obligation to explain why wages must be quarantined. Defining super's objective creates an opportunity to do this.