ClearView will move to raise its income protection premium rates claiming that is was financially unviable to leave them at current levels and doing so would damage other parts of its business.
It would also simplify its premium rating structure and remove policy fees from all cover types in preparation for the new commission rules under the proposed Life Insurance Framework reforms.
As a result of these changes, ClearView stated it would make adjustments to its base premium rates and a small increase to large sum insured discounts for lump sum cover.
In announcing the changes, ClearView claimed the life insurance industry had consistently lost money on retail income protection business for much of the last 10 years, and had lost $381 million on income protection for the year ending 30 June 2016.
““This is neither sustainable, nor is it equitable to subsidise income protection losses from other business segments…”
“This is neither sustainable, nor is it equitable to subsidise income protection losses from other business segments. As a result, most life insurers have been increasing their income protection rates over the last 18 months,” ClearView stated.
“ClearView is not immune to the effects of the industry experience, which is reflected in both the costs of our reinsurance and our expectations for our future claims experience.”
The company stated that despite its market success the current pricing of its income protection premiums did not meet commercial targets and the increase would make income protection pricing more sustainable but competitive in the market.
The combined effect of the premium rate simplification and income protection rate increases would result in a majority of lump sum only policies experiencing a decrease in premium and waiting period income protection rates will increase for 14, 30, 60, 180, 365 and 720 day waiting periods.
The new premiums will apply to all premium types and will apply to all in-force policies from their policy anniversary after 21 October 2016.
The changes were announced alongside a product upgrade to ClearView’s LifeSolutions product suite, which will be effective from 21 October.
Under the changes ClearView customers will be able to link income protection cover inside and outside super and thus be able to fund premiums via super but without the limitations that may apply if they hold cover inside super.
ClearView has also introduced a new benefit – Waiver of Premium While Involuntarily Unemployed Benefit – which will waive premiums for all cover types for up to three months in the event of involuntary unemployment.
Alongside this ClearView said it had updated its trauma definitions and introduced a safety net provision which ensures that where a method of diagnosis is inconclusive, impractical to apply or has been superseded, other appropriate medically recognised methods as per Australian medical standards that conclusively diagnose the condition, to at least same severity, will be considered.
