News In Brief

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  • NAB sells MLC Life business to Nippon Life
  • Funeral insurance cancellation rates concern ASIC
  • Health insurance to be reviewed
  • Macquarie Life supports stroke awareness

NAB sells MLC Life business to Nippon Life

National Australia Bank has sold an 80% stake in its MLC Life business to Japanese insurance group Nippon Life Insurance Company for $2.4 billion

As part of the transaction NAB, which will retain the 20% stake, will enter into a 20 year distribution agreement with MLC Life.

However NAB will be required to carve out its investments business which is also housed within the MLC business and by doing so will shift MLC into a specialised life insurance company.

NAB will retain 100% ownership of the investments business as well as ownership of the MLC brand which will be licensed to MLC Life.

NAB has announced that NAB Wealth, Executive General Manager of Insurance and Executive Director of MLC, David Hackett, will be appointed as MLC Life chief executive at the conclusion of the transaction, most likely in December.

At the same time personnel from Nippon Life will be designated as directors of MLC Life or assigned to the insurer on secondment.

 

Funeral insurance cancellation rates concern ASIC

Funeral insurance policies are being cancelled at a rate of 80% with more than half cancelled in the first year with consumers citing the cost of the coverage as a main factor in cancelling the policy.

At the same time stepped premiums were pushing the average cost of funeral insurance for 80-84 year olds to four times the average cost for 50-54 year olds according to a review of the sector conducted by the Australian Securities and Investments Commission (ASIC).

The corporate regulator said it conducted the review into funeral insurance, which is considered a form of life insurance, due to concerns that people were unsure what they were buying and were losing the benefit of premiums already paid when policies were cancelled.

As part of the review ASIC collected data from nine insurers which offer funeral insurance through around 40 brands and found that during 2014 80% of policies were cancelled 55% during the first year, with 65% of cancellations initiated by consumers and the remainder by insurers for non-payment of premiums.

ASIC stated the main reason for cancelling was cost with stepped premiums increasing with age resulting in the price disparity between 50-54 year olds and 80-84 year olds, but also found that fixed premiums also increased at around 5% annually as part of ‘inflation protection’ measures.

The report from ASIC – Report 454, Funeral Insurance: A snapshot – recommended insurers provide an upfront estimate for consumers of the total cost of the policy; disclose the possibility that the total premiums payable under a policy could exceed the benefit amount and do more to ensure consumers understand key features of the policy at time of sale.

 

Health insurance to be reviewed

The news of a review of the funeral insurance sector comes as Federal Minister of Health Sussan Ley announced a period of public consultation and roundtable discussions into the costs of private health insurance and the removal of regulations that increase its costs and appeal to consumers.

Ley announced the review in a speech to the National Press Club in late October stating “It’s also important to recognise that consumers are becoming increasingly concerned with the value for money – or lack thereof – they are currently receiving from their private health insurance products”.

“Therefore, today I’m announcing that in the coming weeks the Turnbull Government will launch a public consultation to seek consumer feedback on private health insurance,” Ley said.

“At the same time, the Department of Health will be conducting a series of roundtable discussions with key industry and consumer representatives to explore opportunities to amend unnecessary and inefficient regulation which add costs for the consumer; and identify reform options which would enhance the inherent value proposition of private health insurance to the consumer.”

 

Macquarie Life supports stroke awareness

Macquarie Life has been encouraging Australians to get a blood pressure check as part of its support for the National Stroke Foundation’s First Hour campaign on World Stroke Day, which took place on 29 October.

Macquarie Life, Head of Underwriting, Claims and Insurance Proposition, Dr Sally Phillips also joined the Stroke Foundation as a public ambassador to highlight the impact of stroke on people of working age.

According to National Stroke Foundation data around 30 percent of Australia’s 440,000 stroke survivors belong in this demographic with Phillips stating advisers can help educate clients on how to financially safeguard against a stroke.

“The estimated average cost of stroke per person is $129,199 [according to Deloitte Access Economics] so Australians need to take the necessary steps to ensure they are financially protected. This includes talking with their adviser about how they can protect themselves as part of the financial planning process.

“Stroke is one of the top three insurance claims and it can happen to anyone. The right insurance protection is critical in helping to safeguard claimants against the ongoing care needed if they were to have a stroke.”



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