28 March 2019
Media Release - #2019052, 2019

Taking action on the Banking, Superannuation & Financial Services Royal Commission

Recommendation 4.13: Universal terms review

The merits of legislating universal key definitions, terms and exclusions for default insurance cover within MySuper products will be explored through a consultation paper, with the view to improve consumers’ understanding of insurance in superannuation.

The consultation paper, released by the Coalition Government today, will also explore any impact such a change may have on premiums as well as the merits of prescribing minimum, maximum or set levels of cover.

This is yet another example of the Government’s continued action on all 76 recommendations contained in the Final Report of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry.

In his Final Report, Commissioner Hayne said, “Insurance contracts can often be difficult for the average consumer to navigate and understand. And subtle differences in definitions, terms and exclusions from one policy to another can make the task of comparing policies particularly challenging.”

The Commissioner said that this can affect when an individual can claim under a policy, the cost of insurance premiums and how much superannuation an individual will have at retirement.

He recommended, “Treasury, in consultation with industry, determine the practicability, and likely pricing effects, of legislating universal key definitions, terms and exclusions for default MySuper group life policies.”

The Government is focused on putting the interests of superannuation members – not superannuation funds – first. We have already introduced legislation into the Parliament to protect Australians from paying premiums for insurance they don’t want, need or even know they have.

Restoring trust in Australia’s financial sector is part of our plan for a stronger economy.

The consultation paper is available on the Treasury website.