A voluntary code practice for insurance in super has been released by the superannuation industry, to sharp criticism.
The Insurance in Superannuation Working Group (IPSW) has released the Insurance in Superannuation Voluntary Code of Practice. The IPSW is comprised of AIST, ASFA and the FSC.
“The Code, which will come into effect from 1 July 2018, is a first for the industry and sets standards that will provide greater understanding, clearer accountability and consistency of delivery across the superannuation industry,” said a joint release by the industry bodies.
“The Code is voluntary and ISWG expects there will be strong support for trustees to sign up to it.”
“It is a strong step towards enhancing member interests and helping build confidence in and understanding of life insurance through superannuation.”
“The Code improves superannuation member value and protections.”
However the Code has been sharply criticised. Choice policy advisor Xavier O’Halloran told the ABC that it was a “wasted effort” and a “dud”.
Minister for Revenue and Financial Services Kelly O’Dwyer told the ABC that the superannuation industry had “walked away” from a more robust and mandatory code.
The Government previously announced that it had tasked APRA with making it easier for consumers to opt-out of insurance in super, with which APRA is progressing.
The release of the Code may result in further action by the Government.
ISWG Chairman Jim Minto said that insurance “delivers enormous benefits without underwriting and must be preserved as a unique aspect of our superannuation system”.
“Coupled with this, it is very efficient in terms of the value of claims paid, relative to premiums paid.”
“This Code helps automatic insurance function even better for members, as well as providing enhanced protections where members have decided to acquire ‘opt in’ life insurance cover through superannuation.”