The larger industry funds are creating an inefficient life insurance market, according to Australian Prudential Regulation Authority executive John Trowbridge.
In his speech to the Institute of Actuaries in Sydney, Trowbridge said the larger industry funds are currently creating a “form of indigestion within the life industry”.
“Because of the large scale and limited period of [the larger industry funds’] insurance contracts, we now have an inefficient market operating,” Trowbridge said.
This was evidenced by “many of the larger life insurers not participating in industry fund tenders because of the upheaval that occurs at each renewal, usually every three years”, Trowbridge said.
He predicted there would likely be a “restructuring of this market, perhaps along the lines of the coinsurance practices managed by general insurance brokers on behalf of large corporates when they buy their insurances”.
The research house has offered a silver lining after super fund returns saw the end of a five-month streak last month.
A survey of almost 6,000 fund members has identified weakening retirement confidence, particularly among those under 55 years of age, signalling an opportunity for super funds to better engage with members on their retirement journey.
The funds have confirmed the signing of a successor fund transfer deed, moving closer to creating a new $29 billion entity.
A number of measures, including super on Paid Parental Leave, funding to recover unpaid super, and frameworks to encourage investment in the energy transition, have been welcomed by the superannuation industry.
Add new comment