10 Nov The NEED to Review Existing Policies!
The insurance industry is ever-changing. We are witnessing unprecedented change within the life insurance industry and stakeholders are not faring well. For a multitude of reasons, Insurers’ profitability fell away significantly in the 2019FY and 2020FY1, and the future impact this will have on existing policy holders causes us great concern.
Individual Income Protection
Due to sustainability concerns, APRA launched an intervention into individual Income Protection (IP) policies effective from 31 March 2020. APRA announced it was resuming its intervention on 30 September 2020 as they reported life insurers and friendly societies have lost a further $1.4billion through the sale of Individual Income Protection (IDII) policies2.
This included a decision to impose an upfront capital requirement on all IP providers and changes to product features such as the cessation of Agreed Value policies, the avoidance of offering fixed terms and conditions beyond five years, and ensuring effective controls are in place for Insurers to manage the risks associated with longer benefit periods.
Review Policies & Portfolio Requirements
With increasing premium volatility, policy wording changes and expansive differences in product quality, we are urging existing policy holders to review policies and portfolio requirements. This review is not merely for IP, but also Life Insurance, Total and Permanent Disablement (TPD) and Critical Illness (trauma) insurance.
The historical approach of ‘set and forget’ with respect to policies, is no longer appropriate. We are committed, confident and capable of delivering our clients better outcomes.
1 Quarterly Life Insurance Performance Statistics
2 APRA Resumes work to Enhance Sustainability of Individual Disability Income
MBS Insurance Pty Ltd is an Authorised Representatives of Bombora Advice Pty Ltd ABN 40 156 250 565 AFSL 439065. Any advice in this publication is of a general nature only and has not been tailored to your personal circumstances. Please seek personal advice prior to acting on this information.