Individual lump sum and income protection insurance sales are continuing their downward trend, according to latest data released by Plan For Life.
In the year ending September 2019, PFL reports individual lump sum new business dropped by almost 18 percent (17.8 percent), following a drop of 11 percent in the year to June 2019.
There was a similar trend for individual income protection insurance sales, which dropped by 13.3 percent in the year to September, following an almost 10 percent (9.9 percent) drop in the year to June 2019 (see also: Risk Sales Continue to Decline).
…it is important not to read too much into some of the reductions in business
When also taking group risk new business trends into account, PFL reports overall annual sales in the risk market dropped by almost a quarter, or 24.2 percent in the year ending September 2019.
While AMP (-63.8 percent), BT / Westpac (-61.7 percent), AIA (-42.8 percent) and CommInsure (-35.7 percent) all experienced very significant falls in their risk sales year-on-year, those of MetLife (27.0 percent), MLC (8.9 percent) and Zurich (6.0 percent) were higher.
In its notes, the researcher points out that, for the balance of the report “…it is important not to read too much into some of the reductions in business as some companies may have a deliberate strategy of getting rid of unprofitable business and moving funds from Life Office products to Trust based products (i.e. non-life insurance based).
We said that they will decimate our industry and now they have the numbers that confirm what we always said. This fight has to be fought in the same way that the MFAA/Finance Broking industry did and that is by letting the public know the ramifacitions to decimating an industry like ours. We now have the numbers and the proof yet the FPA, AFA etc dont have a strategy apart from consulting with Govt. The definition of madness is doing the same thing as before and getting the same result. Its time to get the consumer to understand our how our industry is being decimated and this will put the pressure on this govt to listen! Wake up FPA, AFA, FINSIA!
Please dont use the mortgage broker example as being a successful campaign. The reversal of that decision only occurred because the hard heads in the banks realized they could lose THAT SHARE of their loans sourced through brokers, because brokers could only charge fees on clients if they could demonstrate to clients that a recommended loan came from non-bank second tier lenders. I had this from an experienced broker. Yes the the TV ads looked good, but the Hayne plan of no commissions fell over because behind the scenes the banks got to Frydenberg, who was able to say he saw the ads
With due respect while there may be some truth to what you have stated, the fact is that the MFAA used the public in pressuring the govt more than what the banks did!
This is very simply the results of an endless, misguided and conflicted attack on the Life Insurance advisers over a sustained decade without let up.
In addition, insurers are pricing product to stratospheric levels whereby only customers and clients with healthy income streams can still afford reasonable cover….and even they are questioning the validity and competitive basis of their insurer.
Advisers are being requested to consider alternative options by clients to ensure they can retain similar levels and types of cover with a view to reducing cost….but hey, ASIC will most likely jump on an opportunity to yet again drag advisers thorough a mincer accusing them of so called
“churning” , even though the client has instructed the action to be taken.
What will ASIC do ???….accuse the adviser of not considering a reduction in the clients current levels of cover as opposed replacing the cover with a more competitive cost structure in order to satisfy the client’s need for reduced cost, even though the client needs and wants the current level of cover to to remain in place.
When the insurers are losing volume of new business inflows and are losing business through cancellations, what do they do?……..bang up premiums for the remaining policy holders to try and offset expenses and still deliver profits to shareholders.
Well done to all those who were instrumental in creating the Life Insurance environment we have today……It has been nothing short of a disaster.
And who will benefit????…..no-one.
Why is it, that no-one in the Government, or the supposed representative bodies and Life Companies themselves, seem capable of clearly articulating the real issues that are causing so much grief for the Life Insurance Industry and the simple solution?
It has been stated many times before and the facts have not changed.
The decline in New Business will continue and there will be a tipping point where the entire Retail Life Industry falls off the cliff, unless changes are made to the insanity that is the current LIF debacle being imposed on all Australians, with NIL BENEFIT for anyone.
The current regime and unworkable road blocks around Life Insurance advice, is hardly an incentive to recruit, though a brilliant strategy to destroy the advice network.
The solution is staring the Government and the Life Insurance Companies in the face and is so simple, yet they continue, lemming like, towards the edge.
ASIC will report next year on the changes to the Industry. We do not need to wait.
Advisers have already started exiting and that tidal wave can be reversed easily, if some common sense and incentive to stay is included in the way forward.
Dear Editor,
Thank you very much for providing the link to the original data. It shows a 9.4% drop in group risk, which is expected with the under 25s opting out by default. With individual companies it would be good to have the group and individual risk shown separately. As group risk is very lumpy a single lost or gained mandate can make a big difference to the insurer’s ‘performance’.
As group risk cover is not very profitable, if at all, their retail risk performance seems much more important but that is the one metric we are not getting.
A good example of how the Government will succeed in killing our industry has been exposed by the shocking legislative policy Protecting Your Super.
A good client who opted into retaining his life cover help within his super was written to informing him that because of the high number of members who opted out of their life cover, his $600,000 life premium is rising from $230 a month to $670 per month. And guess what, it will further erode his super, the very concept that this inept Government want to protect. What a joke! And by the way his wife had the same thing happen( trebled premium). She said stuff it i will cancel the insurance and not be covered. The public purse will foot the bill.
Every comment before me is 100% correct yet nothing is being done. ASIC is a major contributor to the decimation we’re seeing through their left wing political agenda but I also believe the very life insurance companies us stupid advisers thought were our partners, have instead conspired against us in order to protect themselves against the dumb commercial decisions they’ve made over the past 5-10 years.
I am convinced the only party in all this wretched mess we now find ourselves in the middle of, that truly cares about the client is us, the adviser. All other parties in this are either conflicted, corrupt or driven by their own personal / business greed. Prove me wrong.
This is more serious. If we consider that these insurers have been hitting existing customers with as much as 50% premium increases over the last couple of years then its clearly showing that lapses must be at an all time high.
I agree with the comments before. New business will continue to drop significantly this year. Its simply unprofitable to write new business.
The LIF has been a complete disaster for customers, advisers and now the insurers but they still just don’t seem to get it.
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