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APRA releases finalised prudential framework for insurance in superannuation

The Australian Prudential Regulation Authority (APRA) has finalised revisions to requirements and guidance relating to insurance in superannuation following extensive industry consultation over two years.   

The completion of this work fulfils recommendations 4.14 and 4.15 of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry. APRA has now finalised its response to all 10 recommendations directed to it by the Royal Commission in 2019.

The final revisions to Prudential Standard SPS 250 Insurance in Superannuation (SPS 250) and the accompanying Prudential Practice Guide SPG 250 Insurance in Superannuation (SPG 250) are aimed at ensuring better member outcomes through updated requirements for trustees to select, manage and monitor members’ insurance arrangements. 

Today’s response paper confirms that SPS 250 will require trustees to: 

  • strengthen arrangements to protect members from potential adverse outcomes caused by conflicted life insurance arrangements. This will include robust decision-making in the negotiation and ongoing review of insurance arrangements;

  • obtain an independent certification of related party insurance arrangements before entering into, or materially altering, an insurance arrangement, and on a triennial basis. Rather than mandating certification for priority and privilege arrangements, APRA has responded to industry concerns by enhancing the prudential framework to emphasise that trustees must be alert to any business practices or terms and conditions in insurance arrangements that may not be in the best financial interests of beneficiaries; and

  • strengthen data management to improve analysis of member outcomes across different groups of superannuation fund members. 

Further, enhanced prudential guidance in SPG 250 will facilitate easy opt-out of insurance for members, and ensure premiums do not unduly erode members’ retirement incomes. The enhancements to SPS 250 will commence on 1 July 2022. 

APRA encourages trustees to reassess their insurance arrangements and strategy, risk and compliance frameworks in preparation for this date. 

Copies of the response paper, SPS 250, SPG 250 and public submissions are available on the APRA website at: Consultation on Prudential Standard SPS 250 Insurance in Superannuation.


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The Australian Prudential Regulation Authority (APRA) is the prudential regulator of the financial services industry. It oversees banks, mutuals, general insurance and reinsurance companies, life insurance, private health insurers, friendly societies, and most members of the superannuation industry. APRA currently supervises institutions holding around $9 trillion in assets for Australian depositors, policyholders and superannuation fund members.