The Australian Financial Complaints Authority (AFCA) has confirmed an upsurge in complaints around large premium increases impacting insurance inside superannuation but is blaming Government policy rather than superannuation funds.
In a bulletin issued this week, AFCA said it was receiving more complaints than usual about large insurance premium increases because of the Government’s Protecting Your Super changes and noted that it was expecting that the Government’s Putting Members’ Interests First changes would have a similar impact.
“The recent Protecting Your Super (PYS) and Putting Members’ Interests First (PMIF) changes have led to a decrease in the number of people who have insurance through their superannuation. This in turn has led to insurers reviewing their group insurance arrangements, including the premiums,” it said. “For example, PYS changes introduced the requirement for insurance to be ‘opt in’ for inactive superannuation members.”
“AFCA is receiving more complaints than usual about large insurance premium increases because of PYS changes, and PMIF changes might have the same impact.”
“We think this increase in premiums is because the number of insured members is smaller (among whom risk can be spread) and not because of trustees failing to properly insure their members. This issue is affecting both industry and retail superannuation funds,” the AFCA bulletin said.
The complaints authority said it had limited powers with respect to dealing with complaints about premium increases but would be looking at the manner in which superannuation trustees handled informing their members.