AMP has flagged the rollout of a new TPD and income protection product that will not require medical definitions but will assess whether claimants can return to their pre-claim lifestyle.
AMP Chief Executive Craig Meller announced the development and release of the product at a media briefing for the group’s half yearly results in which it posted a 52.5% decline in profit for its wealth protection business, driven by negative experience in income protection and lump sum claims.
Meller said the life insurance sector had historically used particular illnesses, and definitions of certain events, to gauge if a person was eligible to receive an insurance payout but the new product would move to a consumer based outcome.
“What we’re trying to achieve in the new product is a solution that says ‘if you are no longer able to work and you need to restructure your lifestyle, this product will assess that requirement’ rather than, ‘you have to have a heart attack to a certain prescribed definition in order to get a payment’,” Meller said.
“What we are trying to achieve is a more consumer oriented outcome that is driven by consumer need rather than a medical definition. That’s pretty different to the way life insurance, particularly TPD and trauma, have been defined historically,” he added.
He stated AMP would be taking an incremental approach to introducing the product which would be launched to AMP advisers within the next few months.
Speaking about the group’s half year results Meller said AMP had reported a net profit of $523 million for the half year to 30 June 2016, up 3% on $507 million for the first half of 2015.
However, the operating earnings for AMP’s wealth protection business were around half of that of last year at $47 million for the first half of 2016 compared with $99 million for the first half of 2015 with performance impacted by poor claims experience across income protection, lump sum and group insurance.
“To address performance in the insurance business AMP is strengthening income protection assumptions, repricing, continuing the transformation of claims management and accelerating our capital management initiatives,” Meller said.
Sounds quite innovative to me. Perhaps at claim-time will come some issues which aren’t too much of a concern right now. Time will tell. Our industry needs more of this innovation though.
Sounds like Macquarie Active to me
Sounds horrible. The point of definitions being rigid has been to remove grey area which this seems to re-introduce.
Even if it costs more I think that’s a great idea worth exploring. Particularly with TPD, potential claimants often get frustrated that there lifestyle and finances have been negatively impact but they may not meet the narrow definitions for a successful claim. It will be interesting to see the detail and how practitioners respond to it.
The industry needs a fresh touch like an old once beautiful house. It comes with experimenting… This product feels like a very targeted response to the last few months’ media reports on the outdated definitions used at claims assessment. One way to earn back the customers’ trust.
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