2012 APRA Seeks Improvements From Group Life Industry: Lifebroker
May 08, 2012 (PRLEAP.COM) Business NewsAccording to one government speaker at a plenary session of the Financial Services Council Life Insurance Conference 2012, the group life insurance industry can expect to see increased attention from the Australian Prudential Regulation Authority (APRA) in the future.
According to one government speaker at a plenary session of the Financial Services Council Life Insurance Conference 2012, the group life insurance industry can expect to see increased attention from the Australian Prudential Regulation Authority (APRA) in the future.
Addressing the conference, Ian Laughlin, one of the three Members of APRA's Executive Group, acknowledged that the industry has made significant progress over the past year, but emphasised the need for further strengthening in the group life sector.
According to Laughlin, APRA plans to devote increased attention to specific characteristics of the sector in the coming year. Some of that attention will be devoted to the quality of data maintained by insurers, since Laughlin characterised good data as an essential part of the solid foundation needed by insurers. "We are concerned poor data from the funds is being used for pricing in competitive insurance tenders."
As a result, APRA plans to visit insurers prior to releasing its standards for consultation in the context of superannuation. Those standards, known as SPS 250, "will have a specific requirement for trustees to maintain good quality data so that the incumbent insurer and the insurers involved in a tender have a robust foundation," Laughlin said.
The quality of data was not APRA's only concern. Laughlin also addressed what he characterised as "a decline in the skill base to deal with claims." That decline has resulted in "some poor claims experiences," he said.
In addition, Laughlin criticised current group life offerings for their complexity, a sentiment mirrored in the Treasury's MySuper initiative, which emphasises the value of products that can be readily understood and easily compared. "If we could find a way to stop adding bells and whistles it would make a big difference," according to Laughlin, who sees the current scheme of product management as unhelpful to the consumer.
Laughlin was joined on the panel by Duncan West, MLC's Executive General Manager for insurance, who welcomed APRA's increased attention to the sector on the ground that it would make for a more sustainable and differentiated market, and by Scott Ferguson of Pricewaterhouse Coopers Australia, who addressed the possibility that claims management practices in the life insurance sector could learn valuable lessons from practices employed in other sectors of the industry.
The panel was chaired by Pauline Blight-Johnston, Managing Director of RGA Reinsurance Company of Australia. Her remarks focused on problems with churning as an industry practice that contravenes the duty of advisers to act in the best interests of their clients.
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