Media Release

Joint Media Release: Super industry consults on draft Code of Practice to improve outcomes for members

20 September 2017

Joint Media Release: Super industry consults on draft Code of Practice to improve outcomes for members

The Insurance in Superannuation Working Group (ISWG) today released a draft Code of Practice to apply to superannuation funds that offer insurance.

The draft Code – outlining a set of industry standards and new measures for all classes of insurance in superannuation, including life, total and permanent disability (TPD) and income protection – has been jointly developed over the past 10 months by the ISWG with input from insurers, super funds and legal and consumer groups, as well as other stakeholders.

The ISWG is comprised of five superannuation bodies: the Association of Superannuation Funds of Australia (ASFA); the Australian Institute of Superannuation Trustees (AIST); the Financial Services Council (FSC); Industry Funds Forum (IFF); and, Industry Super Australia (ISA).

ISWG Chair Jim Minto said the development of the draft Code recognised the need for the super industry, insurers and other key stakeholders to work together to improve the experience members have with insurance, as well as their retirement outcomes.

“After 25 years of compulsory super, there was a need to examine the insurance offerings inside super to ensure they were still appropriate and affordable for all members,” Mr Minto said. “The draft Code contains a suite of new measures to better target insurance offerings, reduce potential for account erosion and improve the member experience at claim time.”

As part of its process to develop the draft Code and assess key areas for improvement, ISWG commissioned a report by KPMG on default group insurance.

Key highlights of the KPMG report include that insurance has materially reduced Australia’s under-insurance problem, providing net savings to government outlays of up to $1.85 billion over 10 years. In addition, 80 per cent of default insurance premiums deducted from members’ super accounts are paid back as benefits to members. The report estimates that if default insurance was changed from opt-out to an opt-in system, as few as 2-10 per cent of super fund members would take up insurance, with between four and five million Australians being unable to obtain insurance at all or at reasonable rates.

Mr Minto said the report demonstrated the very significant benefits of default group insurance arrangements both to individuals and to the Australian economy but also pointed to the need for industry measures to ensure an appropriate balance between insurance benefits and costs.

“Importantly, the draft Code includes measures to address the impact of insurance on retirement incomes and, in particular, the impact on low income earners, young people, those with less secure employment and women,” he said.

Mr Minto said the ISWG was inviting feedback on the draft Code ahead of publication of a final version by the end of 2017. It was also intending to seek ASIC authorisation for the Code and to have enforceable arrangements to ensure compliance. The Code is intended to apply to all APRA-regulated super funds that offer insurance from 1 July, 2018, with a transition period of 12 months.

Key elements/measures in the draft Code include:

Benefit design: to ensure automatic insurance benefits are appropriate and affordable for the fund’s membership generally and for certain segments of members, notably younger members, those making low or infrequent contributions, as well as those nearing retirement.

Premium caps: when designing benefits trustees will be required to consider earnings for segments of members of the fund to ensure the level and cost of cover does not exceed 1 per cent of estimated earnings and 0.5 per cent for members under 25.

Cessation arrangements: coming into effect only after communicating with members, insurance premiums will stop being deducted 13 months after a member’s contributions cease.

Duplicate insurance cover: trustees required to ask new members for permission to help them identify any other insurance cover held within superannuation.

Member communication initiatives: to improve understanding about insurance contracts and make the process of opting out of insurance more straightforward. Standard plain language headings to explain Total and Permanent Disability (TPD) cover and clear explanations on how TPD and income protection cover will be applied in practice.

Better claims handling initiatives: to improve response times and information provided to members. This will include strict response times and better information being provided to members.

Better data standards and improved transparency arrangements: to help members make informed decisions and to compare insurance offerings; including the provision of standardised Key Fact Sheets.

The draft Code is accompanied by a consultation paper. Submissions are invited on the draft Code and the questions raised in the consultation paper by Friday 20 October 2017.  Submissions can be sent to the ISWG Project Management Office at ISWG-PMO@kpmg.com.au.

For further information please contact the Insurance in Superannuation Working Group Chair, Jim Minto via jrminto@bigpond.com.

About the Insurance in Superannuation Working Group
The Insurance in Superannuation Working Group (ISWG) is comprised of Australia’s superannuation bodies, the Australian Institute of Superannuation Trustees (AIST), the Association of Superannuation Funds of Australia (ASFA), the Financial Services Council (FSC), Industry Funds Forum (IFF) and Industry Super Australia (ISA), who share the common belief that group insurance in superannuation is fundamentally the right policy setting for millions of Australians. This group also includes representative life insurers, superannuation funds and consumer advocates.

Carmen Beverley-Smith

Executive Director - Superannuation, Life & Private Health Insurance, APRA

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Carmen joined APRA in March 2023 and holds the role of Executive Director, Life and Private Health Insurance and Superannuation.  

She has had an esteemed career in financial services, spanning over 25 years. She has held diverse leadership roles at Westpac and Commonwealth Bank of Australia, including across risk, transformation and change, product and portfolio development, and sales and service. 

Prior to joining APRA, she held the role of General Manager, Risk Transformation Delivery Integration at Westpac. This involved leading the group-wide implementation of a suite of solutions to uplift risk management capability and develop data, analytics and reporting. 

Carmen leads with a values-driven approach and a particular interest in developing and mentoring talent. 

She holds a Bachelor of Commerce and Accounting, is a certified Chartered Accountant and a Graduate of the Australian Institute of Company Directors. 

Amy C. Edmondson

Novartis Professor of Leadership and Management, Harvard Business School

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Amy C. Edmondson is the Novartis Professor of Leadership and Management at the Harvard Business School, a chair established to support the study of human interactions that lead to the creation of successful enterprises that contribute to the betterment of society.

Edmondson has been recognized by the biannual Thinkers50 global ranking of management thinkers since 2011, and most recently was ranked #1 in 2021 and 2023; she also received that organization’s Breakthrough Idea Award in 2019, and Talent Award in 2017.  She studies teaming, psychological safety, and organisational learning, and her articles have been published in numerous academic and management outlets, including Administrative Science Quarterly, Academy of Management Journal, Harvard Business Review and California Management Review. Her 2019 book, The Fearless Organization: Creating Psychological Safety in the Workplace for Learning, Innovation and Growth (Wiley), has been translated into 15 languages. Her prior books – Teaming: How organizations learn, innovate and compete in the knowledge economy (Jossey-Bass, 2012), Teaming to Innovate (Jossey-Bass, 2013) and Extreme Teaming (Emerald, 2017) – explore teamwork in dynamic organisational environments. In Building the future: Big teaming for audacious innovation (Berrett-Koehler, 2016), she examines the challenges and opportunities of teaming across industries to build smart cities. 

Edmondson’s latest book, Right Kind of Wrong (Atria), builds on her prior work on psychological safety and teaming to provide a framework for thinking about, discussing, and practicing the science of failing well. First published in the US and the UK in September, 2023, the book is due to be translated into 24 additional languages, and was selected for the Financial Times and Schroders Best Business Book of the Year award.

Before her academic career, she was Director of Research at Pecos River Learning Centers, where she worked on transformational change in large companies. In the early 1980s, she worked as Chief Engineer for architect/inventor Buckminster Fuller, and her book A Fuller Explanation: The Synergetic Geometry of R. Buckminster Fuller (Birkauser Boston, 1987) clarifies Fuller’s mathematical contributions for a non-technical audience. Edmondson received her PhD in organisational behavior, AM in psychology, and AB in engineering and design from Harvard University.

 

Daniel Mulino MP

Assistant Treasurer and Minister for Financial Services

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Born in Brindisi, Italy, Daniel was a young child when he moved with his family to Australia. He grew up in Canberra and completed his first degrees – arts and law – at the ANU. He then completed a Master of Economics (University of Sydney) and a PhD in economics from Yale.

He lectured at Monash University, was an economic adviser in the Gillard government and was a Victorian MP from 2014 to 2018. As Parliamentary Secretary to the Treasurer of Victoria, Daniel helped deliver major infrastructure projects and developed innovative financing structures for community projects.

In 2018 he was preselected for the new federal seat of Fraser and became its first MP at the 2019 election, re-elected in 2022 and 2025. From 2022 to 2025, Daniel was chair of the House of Representatives’ Standing Economics Committee in which he chaired inquiries; economic dynamism, competition and business formation and insurers’ responses to 2022 major floods claims.

In 2025, he became the Assistant Treasurer and Minister for Financial Services.

In August 2022, Daniel published ‘Safety Net: The Future of Welfare in Australia’, which aims to explore the ways in which an insurance approach can improve the effectiveness of government service delivery.