Australia's direct and group life insurance industry is set to face increased scrutiny over the next 12 months, with senior representatives of ASIC and the Australian Prudential Regulation Authority (APRA) stating they have concerns about the sector.
On the opening day of the 2012 Financial Services Council conference on the Gold Coast, ASIC commissioner Peter Kell and APRA member Ian Laughlin said they intended to take a closer look at the pricing, products and governance of the sector.
"It is an area we have a number of concerns in. We're looking for significant improvements in the governance of group life arrangements, pricing arrangements, data management and a number of other things," Laughlin told conference delegates yesterday.
"One other product-specific area is direct life insurance. Many here in the room will be thinking about direct life insurance because it's a growing area, but it's an area that we have quite a bit of concern in."
Laughlin said one of the key areas APRA would turn its attention to when taking a closer look at the sector was the governance of those in new business.
"We want to make sure that the boards and senior management are fully aware of the nature of the business that they are getting into. At the moment we're not satisfied that actually is the case," he said.
Kell echoed Laughlin's points, saying ASIC was also keen to examine the sector further.
"Direct insurance is something that we're looking at and working with Ian's people on that issue," he said.
