The latest figures from researcher DEXX&R paint a gloomy picture for the life insurance sector.
According to the Life Analysis Report for the year ending December 2014, the total lump sum sales result of $1.3 billion in new annual premium over the 12 months to December 2014 was the same as that recorded for the 12 months to December 2013. Quarterly sales results were also down, falling 20% on the September quarter.
Individual disability income sales decreased by 1% year on year, to $467 million. Quarterly sales were down 13% to $108 million.
Lapses on individual lump sum policies remained close to the industry high of 15.9%, falling slightly in the year to 31 December 2014 to 15.4%. Disability income products performed marginally better, with the attrition rate falling from 16.2% in December 2013 to 15.6% in December 2014. However, DEXX&R noted there was a long-term trend of increasing discontinuances in the disability income market.
Group risk premium increases, paid by some of the largest industry funds, continued to drive premium inflows in the group market, which reported an increase of 21% for total inforce group risk business for the year. This in turn contributed to an overall risk inforce result of $13.6 billion, up $1.4 billion or 12% on the year ending 2013.
What we have here is a race to the bottom.
The freeing up and lax regulation on direct and Industry Super Insurance providers who sell inferior products and give disgraceful advice that never meets the best interest duty in any area, is a major factor in the lapse rates of quality retail life products.
Clients will never understand the differences and are not interested or have enough time to learn the complexities of Life products. They rely on the person in front of them or over the phone, to give them factual information that will provide them with appropriate cover.
Direct and Industry product floggers run a mile when it comes to claim time and the client finds they are not getting paid, or waiting for many months to get answers, or after fighting all the way to get paid, find their benefit will only pay a fraction of what they need, with the same result every time, loss of assets, savings, their home and now a reliance on the Federal Government for financial assistance.
OH, and as an extra kick in the guts, the poor client then finds they are uninsurable.
When will the regulators start investigating the tsunami of destruction these product floggers are causing, which is also dragging down the whole Industry and Australia.
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