December 3, 2019
Our latest poll is asking whether you support APRA’s intervention on income protection insurance products.
The corporate regulator has effectively cracked the whip with life companies and friendly societies, laying down a series of measures designed to halt the slide of income protection insurance into an unsustainable black hole, out of which it may never recover (see: APRA Sets New Course…).
The regulator is implementing three distinct sustainability components:
- Consequence management – capital charges levied against the retail insurer
- Managing riskier product features – including dispensing with agreed value contracts and limiting the initial policy duration to five years
- Data – delivery to APRA of relevant, timely IP product data to utilise in monitoring and improving sustainability
The first two of these component measures will directly impact IP policy pricing and product construct, while the totality of the measures are intended to reverse the IP unsustainability slide and deliver future sustainability and certainty.
APRA’s intervention reads well – but do you support the regulator’s move?
Is it about time something was done? Or do you think free market forces are being obstructed?
The regulator’s open letter to life companies and friendly societies leaves the reader in no doubt as to its determination to address and resolve this issue:
We’re keen to learn your verdict. Is APRA interfering where it shouldn’t? Or has the ‘fear of first mover’ syndrome forced the regulator’s hand?
Let us know what you think and we’ll report back next week…