AMP is set to implement a series of pricing changes for its AMP Elevate and AMP FLP product ranges.
Taking effect from 29 April, the pricing review sees both increases and decreases as the insurer, together with its competitors, seeks to achieve the delicate balance between competitive market rates and ongoing sustainability. Changes include:
AMP Elevate
Lump Sum Stepped
- Reductions for Life Insurance of up to 14% (Death) and 9% (Linked TPD)
- Reductions for standalone TPD for smokers of up to 5% above age 60
- Increase trauma premiums by 5% for ages up to and including age 50 on stepped and blended premiums
Lump Sum Level
- Level premium – 15% increase for all benefits
A 5% loading will also apply to Life and TPD sum insureds of $250,000 or lower.
Income Protection
For AMP’s Elevate Income Insurance Plan, rates will be retained at their current levels or increase by up to 10%, where the level of the increase will be determined by the insured’s age and existing benefit period. Some decreases of up to 5% will be applied at older ages.
Other changes applying across Elevate Income Insurance plans include a 5% increase for smokers and females.
AMP FLP
Lump Sum Stepped
AMP advises the premium rate curve has been altered to reflect the distribution of claims across age bands and also to improve lapse rates.
…approximately 60% of AMP’s existing lump sum customers and 30% of its existing IP customers will see either no change or a reduction in their premiums
Insured lives under age 50 will be subject to tapered price increases of up to 10% for Death and TPD and up to 5% for Trauma insurance. For policies where the insured life is over the age of 50, rates will stay the same or reduce by up to 5% (Death), 4% (TPD) and 2.5% (Trauma).
Lump Sum Level
10% increases across Death, TPD and Trauma
Income Protection
Pricing changes for the AMP FLP Income Protection product will apply to new business from 29 April. A broad set of both minor and major increases will apply across both stepped and level premium options, subject to the policy’s waiting period and benefit period combinations.
An AMP spokesperson said this pricing reflects a range of factors including the market environment and claims experience: “We keep increases to a minimum, ensuring our products remain competitive and provide customers with the best possible value,” said the spokesperson, who added that approximately 60% of AMP’s existing lump sum customers and 30% of its existing IP customers will see either no change or a reduction in their premiums.
In communications that will be sent to policyholders, AMP notes the options that may be available to them that would contribute to making each policy more affordable. Depending on the type of policy, these suggestions include:
- Changing the waiting period
- Changing the benefit period
- Removing the indexation feature from the insured amount
- Reducing the level of cover
As an industry participant I have advocated the need of insurance and the quality and integrity of Australian Life insurance companies for some time.
I will continue to advocate the need for insurance for my family, friends and clients.
The continued increases of levelled insurance premiums across the industry is not good.
This solvency issue needs to be addressed in a manner, to ensure all policy holders’ premiums are sustainable for a minimum of the life expectancy with limits on premium price increases.
Policy owners either select or are recommended their insurers and mutually agree to deal with utmost good faith. That includes the regular payment of premiums, with the expectation that the other party will pay – without substantial increases at a later time when the policy’s protection is even more likely needed.
Long term policy holders will feel unfairly treated – this point has to be understood.
I may have missed it being announced in Risk Info but over a week ago AMP announced increases to existing AMP, AC&L, and National Mutual/AXA policies of up to 30% for level premium IP with 30 and 14 day waiting periods but chose to segregate stepped from level, with only 16% increase applied to the same product with a stepped premium
Sorry Risk Info but you have to do better, and don’t protect insurance companies when they sneak out such outrageous increases.
Any risk advisor with more than a decade in this industry knows that the egos of the then AMP board were rampant in 2009 when AXA departed Australia post GFC and offered up to the market a book of business that was always dodgy at best . That purchase occurred after AXA had picked on a particular National Mutual book of tradesmen and announced a 25% increase in all IP premiums to force healthy people out of the book.
Now there is industry speculation that AMP are about to sell that book of ex AXA policyholders to a reinsurer, but before they do they have to jam up the premiums to get it reasonably profitable. AMP have known, or should have known, for the last 5 years, that the AXA book required premium increases.
The whole affair leaves a very sour taste in the mouth of risk advisers who present IN GOOD FAITH level premiums to their clients as a long term method of premium savings and cost containment. We have blindingly accepted the insurers line that level premiums may increase with poor claims expoerience, but there will be a similar increase with its stepped premium version, and therefore the “relativity” will always be maintained.
And here’s the sting. When those disgruntled clients receive their notices from AMP they will, firstly, blame the adviser, and then probably cancel the policy or go elsewhere if they can.
In four years time when ASIC does its promised review of the impact of LIF on industry “churning”, those very same lapse forced by AMP stupidity, will justify the continuation or even the downward revision of the new LIF commission scales.
Advisers will wear the blame, not the insurers
I have a AMP Elevate Life cover policy on Level. Life cover rates have been trending downwards for years now with no signs of a reversal to this trend. And yet AMP are mandating a 10% increase to my Level policy.
How is this justifiable?
I have had an income protection policy with AMP/AXA for over 20 years, I have recently received a premium update letter, the proposed increase is over 25%. After several conversations with AMP no one can give me a clear cut reason for such a ridiculous increase. Looks like they have just lost a long term customer.
After 20 years on level premium, with the 25% increase you still might have a cheaper policy than if you bought a new one…. Maybe get advice.
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