AIA Makes Changes to Premium Rates

AIA Australia has introduced a large sum insured discount and reduced premiums on some policies for new business written under its Priority Protection and Priority Protection for Platform Investors (PPPI) products.

AIA Australia, Chief Retail Insurance Officer, Pina Sciarrone

AIA Australia, Chief Retail Insurance Officer, Pina Sciarrone

As part of the changes, the insurer will introduce a 26% Large Sum Insured Discount for clients Life Cover and Term Cover between $750,000 and $1 million while cover between $500,000 and $749,999 will retain a 20% discount and sums over $1 million will retain a 30% discount.

Changes will also occur with stepped premiums with Life Cover stepped premiums decreasing by an average of 5-6% (for non-smoking policyholders between 35 and 65 years of age).

Crisis Recovery standalone stepped premiums will increase by an average of 4-5% for policy holders over 35 at next birthday and by an average of 9% for those 35 and under at next birthday. Crisis Recovery rider stepped premiums will also increase by an average of 5% for policy holders over 35 at next birthday.

Life Cover and Crisis Recovery policies with level premiums will also increase by up to 9% for policy holders under 40 and by up to 5% for policy holders between 40 and 50 with no changes for policy holders over 50 at next birthday.

AIA Australia Chief Retail Insurance Officer, Pina Sciarrone said the insurer was aware that Life Cover was a key element of most of its Priority Protection policies and the changes were made to maintain sustainable options for advisers and clients and to ensure they were competitive in the market.

  • Jake

    Discount Stepped policies and increases on Level policies. And people wonder why advisers are scared of recommending Level premiums to their customers. Another money grab from AIA targeting the customers who have had advice, value insurance and realise the long term need for the insurance.

    I cannot believe I recommended AIA Life and Trauma with Level premiums until age 70 to some of my clients.

    How can any adviser recommend Level Premiums with any confidence when Insurers go for the easy money associated with increasing Level premiums.

    Now all the advisers who thought they were working in the Best Interests of their clients by recommending Level Premiums with AIA have to go back to their client and tell them

    “I wasnt actually working in your best interests when recommending AIA Level premiums. I was actually working for AIA in their ponzy scheme to enrich their share holders.

    And then the regulators have the audacity to accuse us of churning policies!!!! What are we supposed to do?? We cant recommend Level Premiums. We cant change a policy to a better or cheaper policy without being accused of churning. Catch 22.

    Whereas the direct companies like real insurance etc can get away with everything as they dont have to do SOA’s or act in the clients best interest and can say things like “this Life and TPD policy covers all the same things as the current policy you have and is much cheaper” even when they know nothing about the customers existing cover and have no legal reason act in the clients best interests.

    And paying a 60-20 commission to a person at the direct companies call centre (in the phillipines) who has done a 2 day insurance course is a great result as they can do as good a job as a Financial Adviser who has years of training and experience, university qualifications, prepares a SOA, works in the clients best interest, helps they client with insurance needs, explains all the options to them and is there to help at claim time.

    ASIC and their bosses (the Banks) have got their way. Life insurance advice is DEAD.

    Buy shares in Maurice Blackburn and the other BLOOD SUCKERS as their insurance claim business is going to sky rocket when clients start to realise the insurance they bought online is worthless because they didnt have time to read the 100 page PDS and believed what they could understand of the call centre sales reps spiel that the new policy was better than the old policy.

    But of course the Direct Insurance Sales rep is not liable for anything as it was only general advice. But if it was an adviser who downgraded a policy to save a coupe of bucks then……………………

    • Frustrated

      Well said Jake. In another article in this week’s risk info we read that Asteron’s “Inforce annual premiums contracted by 0.9% from $813 million to $806 million with the bulk of that coming via advised channel which increased marginally from $652 million in the 2015/16 financial year to $658 million in past financial year.”
      Here’s proof that the insurers need the Adviser network!

      What makes the AIA situation worse is that their New Business processes are at times, appalling! Our office has recommended AIA to a number of clients over the years but the past few years in particular has seen a marked increase in mistakes from AIA’s New Business area. For example – a self employed client who has life cover owned by AIA Super and paid by his business, income protection owned by the client and paid by the business, trauma owned and paid for by himself, business expenses owned and paid for by his business – no matter how clearly we explain this set up, the NB area within AIA continued to stuff it up for this and a number of clients. However, when calling AIA, try asking AIA to be put through to New Business – it will not happen. Not only are advisers not permitted to speak to AIA’s New Business area, the same applies to AIA staff! All they can do is send emails to New Business and hope for the best!

      The same thing applies to the AIA commission area. I was subject to a claw back by mistake and yet AIA staff were unable to call and speak to their commissions area and find out what happened and why! All they could do was “email” this area and hope for the best!

      it is inconceivable that an insurance company’s staff are not permitted to speak directly to other areas within the company. And yet the premiums continue to rise…..

      • Jake

        I would like to say that in all my dealings with AIA i cannot fault their process any more than i can fault processes at other insurers, AIA continue to be one of the BEST insurers. And AIA are not alone when it comes to ripping off customers with Level Premiums so they can reduce the rates for their new business teams. AIA, just like the other insurers, are a company who’s SOLE aim is to make money at all costs. They are entitled to make this in any way that is legal. Advisers are the only people who are expected to do things for free (FF, SOA, BID, 2 appointments and application).

        Oh no, thats right. mum and dad clients would definitely spend $1,200 on top of premiums to get advice from an adviser instead of sorting it out themselves in 15 minutes over the internet. So we don’t have to work for free cos these clients exist. Too bad Maurice Blackburn, no direct insurance rip off policy here to take to court for 50% of the life insurance benefit.

        My problem is with the regulators and politicians and the pursuit of the LIE that they want all Australians to have access to affordable advice whilst they actively try to reduce the number of advisers able to ADVISE people (due to increased paperwork, legal requirements, training and qualifications coupled with a 2 year claw back) of their needs and allow the insurers direct wings and industry funds to bypass the laws and consumer protections provided in an SOA and with the BID.

  • Reality Check

    Another rip off for customers. You cannot recommend level premiums safely anymore. Next AIA will actually be scratching their heads and wondering why their lapse rates are increasing.

  • Jake

    Its a great strategy. Get existing customers to pay for the new business customers.

    If only I could tell all my existing clients that your fees have risen by 5% to subsidise the premiums for all my new clients.