Super’s blowing smoke

ASIC review reveals unfair insurance practices

SOME superannuation funds are still automatically classing customers as smokers, meaning they pay higher insurance premiums.

The financial services regulator says all superannuation trustees have now agreed to stop treating fund members as smokers by default under their life insurance cover.

An Australian Securities and Investments Commission review of insurance in superannuation found some trustees were still automatically defaulting members as smokers when transferring them to different sections of the same fund, resulting in higher insurance premiums.

ASIC said when members who left an employer were moved from an employer plan to a personal one within the same superannuation fund, some trustees automatically classify them as smokers or blue-collar workers unless they have specific information to the contrary from the person.

If the member is not a smoker or blue-collar worker, the default transfer settings can unfairly increase insurance premiums and therefore significantly affect the size of their superannuation benefit, ASIC said.

It noted only 14.5 per cent of the adult population are daily smokers and about 26 per cent of all workers are engaged in blue-collar work.

The ASIC review also found issues with some super trustees taking too long to resolve complaints.

Almost a third took more than 90 days on average to resolve complaints about insurance.

ASIC deputy chair Peter Kell said while some improvements were being introduced by super trustees, there was still considerable work to do to raise standards.

About 12 million Australians hold insurance through their superannuation, a recent Productivity Commission report noted.

ASIC released its report yesterday, ahead of a twoweek banking royal commission hearing about insurance that begins on Monday.

AAP