APRA progresses consultation on prudential standard governing insurance in superannuation

The Australian Prudential Regulation Authority (APRA) has commenced a second round of consultation on revisions to Prudential Standard SPS 250 Insurance in Superannuation (SPS 250).

The proposed changes are aimed at improving superannuation member outcomes by helping trustees select the most appropriate insurance policies for their members, and monitor their ongoing relationships with insurers. The key changes to the standard address two recommendations from the financial services Royal Commission¹, and reflect Government recommendations that trustees make it easier for members to opt-out of insurance, and ensure that premiums don’t inappropriately erode members’ retirement income.

APRA began consulting on proposed updates to SPS 250 in November 2019. Although feedback from industry was broadly positive, a number of submissions sought further information about aspects of APRA’s proposed changes.

In response, APRA has today released a new draft prudential standard for further consultation, incorporating revised wording aimed at clarifying some of the revised requirements of SPS 250. 

APRA has also released for consultation an updated version of Prudential Practice Guide SPG 250 Insurance in Superannuation (SPG 250), which contains further guidance on the new proposed requirements.

Submissions on both the SPS 250 and the accompanying prudential practice guide are open until 5 March 2021. APRA intends to finalise both documents by the middle of the year, with the finalised SPS 250 expected to commence from 1 January 2022.

A letter outlining the consultation, the updated draft SPS 250 and draft SPG 250 are available on the APRA website at: Consultation on Prudential Standard SPS 250 Insurance in Superannuation.

Footnote:

¹ Royal Commission recommendations 4.14 and 4.15