ASIC confirms insurer super rebates
The Australian Securities and Investments Commission (ASIC) has pointed to superannuation fund trustees who have been receiving benefits from insurers including accepting corporate hospitality.
In a submission filed with the Productivity Commission (PC), ASIC pointed to an analysis of data it has received from trustees this year, and has specifically mentioned the relationship between fund trustees and insurers.
It said rebates were provided [by insurers] to around 20 per cent of trustees and that around 20 per cent of trustees “reported receiving other benefits from insurers such as corporate hospitality”.
Importantly, and not unlike ASIC’s criticisms of the situation in the life/risk space, ASIC noted that shortcomings it had identified with respect to the provision in life insurance in the superannuation in its Report 523 had not actually improved.
“ASIC has undertaken an analysis of the data received from trustees to date. Unfortunately some of the adverse member outcomes we identified in our Report 523 were present in the data wehave received to date,” it told the PC.
“So far, results indicate that:
• approximately 10 per cent of trustees still use smoker defaults, and approximately 10 per cent of trustees use defaults in relation to blue collar workers. One trustee used both of these defaults.
• There were also a small number of trustees ( 6 per cent) who only told a member about the circumstances when cover may cease in the PDS. That is, they gave no further warning that cover might be about to stop closer to the time when cover might cease.
• It also appears that rebates are provided to around 20 per cent of trustees by insurers, and around 20 per cent of trustees reported receiving other benefits from insurers such as corporate hospitality. • 70 per cent of claims were accepted in full during the time period of our notice and approximately 30 per cent of complaints received by trustees related to insurance issues (36 per cent of insurance related complaints related to TPD).
The ASIC submission said notices had been served on a smaller number of trustees to follow up on the data it had received to date with the notices seeking information about the process of selecting insurers by trustees, the defaults transfer arrangements used by trustees, complaints handling processes trustees had in place, and disclosures made to members about all of these matters.
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