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ASIC communication approach creates challenges: MLC

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Regulator warnings over life insurers’ communications about insurance in super are “difficult to reconcile” with the preferences of younger generations, according to MLC Life Insurance.

Chief of Group and Retail Partners Sean McCormack says demands from the Australian Securities and Investments Commission (ASIC) that insurers not push members to keep their insurance could present challenges given research shows young members want to have “loud” communications about their cover.

“They say ‘we’ve got a limited span of attention, so if you want to get to us, you’ve got to get to us early and you’ve got to be loud; you’ve got to be in our face, and communicating up front and clearly’,” Mr McCormack told the Australian Super Funds Association conference in Melbourne last week.

He says there is an “opportunity to help educate the regulator” about the research insurers have done on member communications around the reforms, and use that to “guide the future approach that ASIC asks the industry to take”.

He told the conference that demands for an in-your-face style of communication comes from a lack of trust and confidence in insurance in super, because young people were being opted in to insurance without perceived choice or knowledge.

ASIC recently warned super funds and insurers to use balanced and factual information about the Putting Member’s Interests First reforms, and not to create an impression that the only option for members was to retain insurance.

It says some communications about the Protecting Your Super bill weren’t balanced when describing the available options, benefits and negatives, and focused on the potential loss of insurance without considering the benefits it would bring by stopping account balance erosion.

But Mr McCormack says the research shows that customers want educational, simple and relevant communications that reinforce the value of insurance.

“With the way that we were instructed [by ASIC] to adopt that Protecting Your Super reform, it’s very, very challenging to hear that.”