AMP Will Close to New Risk Business Following Sale

Financial advisers will no longer be able to offer AMP life insurance policies to clients after the insurer confirmed its risk book would eventually be closed to new business as a result of its sale to Resolution Life (see: AMP to Sell Life Insurance Business).

An investor presentation released by AMP to the ASX stated its wealth protection business would transition to specialist in-force management, and that new AMP customers and advisers within its advice channels “…would have access to a range of life insurance products available in the market”.

AMP confirmed with Riskinfo that the transition to specialist in-force management would result in no change to its risk product range currently on offer, but that a phased closure to new business would be introduced in Australia and New Zealand. This shift would be reflected in the Approved Product Lists of employed and aligned advisers under AMP-owned advice licensees.

…a phased closure to new business would be introduced…

The life insurer also confirmed that Resolution Life would not be releasing any of its own products into the market as its only focus was on existing AMP policy holders.

Resolution Life is a UK-based insurance and reinsurance group that specialises in purchasing legacy life insurance businesses and currently has ownership or involvement in 27 life insurance companies across the world.

Commenting on the sale agreement, Resolution Life Executive Chair, Sir Clive Cowdery said that as part of its acquisition of 27 life insurance companies “…Resolution has developed an operating model which puts delivering policyholder benefits to existing customers at the centre of our business”.

AMP also confirmed its brand would be retained on its life insurance products until at least 2020 under a brand agreement, but was likely to change after that date.

  • Jeremy Wright

    31 years ago when I first started coming up against AMP, their tied advisers I met, seemed to be like a reclusive cult, where they were brain washed into thinking that AMP was the only Life Company of worth and why would any one bother with any other Life Company or their products.

    AMP had a very good training platform for many advisers starting out, though they were naive and AMP was ruthless with any adviser who tried to leave and take their clients.

    I hope for the AMP advisers and their clients sake, that AMP is not heading back down that path of a closed shop mentality.

    It does not work and Australia is now aware of bullying and monopolistic tactics.

    I hope Sir Clive Cowdery is aware that the Australian market is more sophisticated than the rest of the world when it comes to Life Insurance and Australians will walk away without blinking, if they feel they are being taken advantage of.

    If I was an AMP adviser, I would be reading the new agreements very carefully, or you could become an indentured slave.

    I will look with interest at what evolves.

  • Grahame Evans GPS Wealth

    Quite frankly disgusted with this whole outcome for a variety of reasons. Not a shareholder but was once but more a concerned industry participant. The sale puts no value on the AMP name relating to life insurance products because no new product will be sold. Yes the name got weakened by the revelations of the RC but really? No value? Where are boards these days which will get in there, roll their sleeves up and fix the issues not take the easy way out and sell a business but not only any business, Australia’s most well known life brand. The reason, to release capital? To do what? Pay BOLRs? Has the AMP Board fallen into the old trap of listening to their advisers who make money out of transactions rather than doing what they are paid for. There is a wealth of experience on that Board excuse the pun . Why aren’t they using it? if the seat is too hot, hand in your directors badge and move over for someone who will get in there and spend time fixing the issue. When the going gets tough, sell! Really?

  • Old Risky

    What a mess. This is the result of the type of decision-making process that occurs when the liquidators come in. I’m given to understand that redundancies were handed out at lunchtime today.
    This AMP Board has been derelict in its duty. Why not split the businesses and the shares. Why not keep a 185 year old insurer in the business because, whether we like it or not, the disappearance of AMP as one of the nations largest life insurer puts a shadow across the industry as a whole

    I carefully read Mike Wilkins letter to me yesterday. There is nothing precise in
    his letter which says that AMP are going to stop taking new risk business. At best, in the best managerial style, he talks about a “phased closure”.

    Frankly that’s just “wish listing” – no adviser is now going to place a
    risk policy with AMP today knowing that they will have to deal with a reinsurer
    if there is a claim down the track. Let’s face it : a year or so ago a reinsurer
    bought the former National Mutual/ACL/Axa book of business off AMP ( the famous 2009 AMP Board Chairman’s “Captain’s Pick”), but only after AMP had jacked up the premiums,including a 29% increase on level premiums for income protection.

    I find it difficult to say this about my AMP colleagues, few of whom controlled their hubris over the years, but I really do feel sorry for those advisers who will insist on staying in an AMP AFSL, particularly in the hope of a BOLR payout.
    I suspect a very large proportion of AMP risk clients have had enough
    and want out to get out of their insurance and go to someone else if they are healthy. If that business has been written under LIF, and that the client walks, the adviser will suffer
    because of the two year clawback. And AMPs action caused the lapse !

    Having now been told that AMP will effectively hand in its life insurance license, that news seems to confirm that AMP is also out of group cover for industry funds. Seems like we are in for a bit of a revolution in that area as I’m sure even the dumbest regulator must have some concerns that one particular group insurance provider will end up with a very large GROUP market share, in the dust of AMPs self-immolation.

    • Reg Stenhouse

      What willill happen to our clients Whole of Life Policies and endowment policies.
      Will the cash value remain. Will bonuses be paid on claim, will claims be paid.
      There are hundreds of thousands of elderly AMP clients who have these policies using for funerals, some have borrowed against them, still paying the premium and interest relying on the cover and bonuses to pay for funerals etc.
      What a dirty rotten stinking mess.

  • Phil

    Let me assure you that you do NOT want to be trapped within a legacy book arrangement – through no fault of yours! Like many of my 30+ year experienced advisers I rarely changed insurers. I still have a few clients that go back to the late 80s and early 90s with the same life office…well, not quite. Another life office acquired the original life office and in more recent years made the old book of clients legacy policies. My clients are now ‘trapped’ within a legacy regime that makes it near on impossible to act in their best interests. E.g. an ‘ordinary’ self owned Term life policy sees the client wanting to now put inside their SMSF. But oh no, you can’t – different reinsurer. You have to be underwritten for the current product offer if you want to pay the premium from your SMSF. Shame about the heart attack 10 years ago and the more recent diagnosis of Type 2 diabetes not to mention moderate sleep apnoea. But that’s okay we’ll just add +200% to the standard premium rate. So your monthly ‘ordinary’ premium of $400 – becomes $350 under the new product line with a medical loading lifting it to $1,050 a month inside your SMSF. My sage advice – stay well away from AMP now. If you think life offices are hard enough to deal with…they’re nothing compared to Reinsurers!