The Australian Prudential Regulation Authority has admitted some areas of compliance for insurance in superannuation are “devilishly tricky” for funds.
The comments were made by Greg Brunner, general manager-supervisory support division at APRA at an Australian Institute of Superannuation Trustees symposium in Melbourne.
Brunner told an audience of trustees there were “significant” transition and implementation issues for the regulation coming into force next July and that APRA itself was still working out the best ways to comply.
“We are trying to get clarity within the confines of the legislation. We are trying to be as flexible and accommodating as possible without breaching any of the intent of the legislation,” he said.
One of the biggest areas of confusion is over best practice around the choice to grandfather existing insurance offers and the choice of giving members the same APRA compliant insurance offer from July 2014.
There is also confusion over whether grandfathered insurance cover can be upgraded or amended.
Brunner said it was “difficult to be definitive about what is in and what is out” and that “some of the details in this area can be devilishly tricky.”
Feedback from funds on the problems they were encountering will help inform policy which will be regularly updated on the frequently asked questions section on the APRA website.
“I would encourage people to come to us, because it does give us an opportunity to think through seriously the implications and clarify through our Q&A approach,” said Brunner.
An indication of the higher standards APRA is generally expecting in their provision of insurance cover was given by Owen Brailsford, senior manager South West Region – specialised institutions division at the regulator.
He said funds would need to demonstrate that cover had been tailored for the membership.
“In the past there have been occasions when funds have gone to an insurer and said ‘well provide us with insurance’. This is something boards will need to address in a more proactive way than they have done in the past.”