ASIC faces questions on insurance premium hikes

At a recent hearing of the House economics committee, deputy chair Andrew Leigh slammed ASIC for “not yet responding” to calls for an investigation from Labor MP Matt Thistlethwaite into the Colonial Super Retirement fund.

The fund had increased members’ annual life insurance premiums from $5,494 to $7,804 – an approximately 42 per cent rise – and entered into a further three-year contract with related entity CommInsure to provide group insurance to the fund, Mr Leigh said.

Responding to questions on notice from the committee, ASIC said it had referred the matter to APRA and would not be taking further action.

“APRA has primarily regulatory responsibility for enforcing the duty of fund trustees to act in the best interests of members,” ASIC said.

“ASIC and APRA have a close and co-operative working relationship and we regularly share intelligence, including in relation to market practices in insurance in superannuation.”

The regulator said information provided by Mr Thistlethwaite was inconclusive around whether the fund trustee had breached its obligations to act in the best interests of members.

“Whether the trustee contravened the law in any way by entering into a new three-year contract with the insurer is a matter that would require a fulsome analysis of the decision-making process of the trustee in relation to this matter,” ASIC said.

“There are a significant number of complexities, and threshold steps, needed to establish an actionable contravention of the law. The mere existence of a significant price increase is not determinative of a breach in and of itself.”

ASIC said it “did not propose to investigate” the Colonial fund any further based on the information provided.

“ASIC continues to monitor trustee practices about insurance product changes, including premium price changes, across the industry to the extent that they relate to ASIC’s regulatory remit,” the regulator said.