A report by Swiss Re expects life insurance premiums across the Asia Pacific region to rise in real terms, with Australia leading the way.
The report’s authors expect life premiums in Australia to increase by 10.5 percent this year.
The report also states that Australia’s economic growth will “…modestly boost group insurance”, which is bought primarily by the superannuation funds.
“We are positive on the outlook for global insurance premiums, expecting above-trend growth of 3.3 percent in 2022 and 3.1 percent in 2023,” states the report.
“This forecast is underpinned by rising risk awareness in both the life and non-life segments, as consumers and businesses alike seek protection following the shock of the Covid-19 pandemic.
.“Rising risk awareness is generating demand for more insurance protection. The pandemic has increased consumers’ awareness of health and mortality risk and underpinned life and health insurance premium growth.
…The change in risk perception is reflected in observed growth in life and health insurance premiums…
“Our 2020 and 2021 surveys of consumer trends in major Asia-Pacific markets find consistent evidence of consumers’ rising awareness of health and mortality risks and a perception of being under-insured. The change in risk perception is reflected in observed growth in life and health insurance premiums.
“The broad-based elevation of risk concerns also helped sustain positive growth in life protection insurance premiums last year, with volumes up 1.5 percent in 2020 and 4.9 percent globally in 2021.”
The report states that the growth contrasts with previous crises, during which life premiums contracted. For instance, life protection premiums contracted 0.7 percent during the GFC in 2008 and remained almost flat in 2009, while health insurance premium growth slowed two percentage points to three percent during the GFC.
The report also states that digital and online insurance options were welcomed by many consumers.
“The pandemic has transformed consumers’ receptiveness to interacting with insurance digitally,” say the report’s writers. “Whether for sales, after-sale service, claims or add-ons, people now see online provision as essential.
“In Asia Pacific, our consumer surveys find two thirds (66 percent) of respondents see online features as key criteria for life and health insurance purchases.”
Interestingly, the report points to a mixed trend for excess mortality, with Covid-19 continuing to affect the life insurance industry.
It states: “In November 2021, North America is recording average daily death numbers similar to November 2020. Europe is seeing an increase in cases over the past several weeks, but this is not converting into a proportional increase in deaths or hospitalisation.
“Excess mortality shows a mixed trend, with most countries returning to positive excess mortality after having experienced negative excess mortality over the [northern hemisphere] summer months.”
The report states that unlike many European countries, the US has experienced continuous excess mortality since the start of the pandemic.
…third quarter 2021 deaths were up by 40 percent over pre-pandemic levels…
Elsewhere, US life insurer OneAmerica is reporting a rise in excess mortality. According to a report by The Center Square, the US$100 billion insurer says third quarter 2021 deaths were up by 40 percent over pre-pandemic levels.
“Just to give you an idea of how bad that is, a three-sigma or a one-in-200-year catastrophe would be 10 percent increase over pre-pandemic,” the firm’s CEO Scott Davison is quoted as saying. “So 40 percent is just unheard of.”
Well, this will be a welcome relief for long suffering consumers. The past few years have seen increases of 30%, 40% and on some older policies 50% year on year. If this article is correct they can now look forward to a reprieve! Nice easy increases of only 10% per year.
What a bunch of clowns these product managers at life companies were over the past 20 years, creating such unsustainable products with every kitchen sink benefit known to man at a price you just couldn’t say no to. The chickens, clearly, have now come home to roost. The life companies are being hit with the perfect ongoing storm, comprising:-
1) lapses as far as the eye can see due to premiums going through the roof
2) compliance making adviser life hell so they’re less able to see people to sell life products
3) the bad decision by life companies not to advocate for advisers when they sat silent during the imposition of the 2 year responsibility period
4) AND again when they sat silent as the government reduced commissions. They did zero to support their advisers against this onslaught. Lots of words were spoken but none to defend adviser interests. Now advisers cannot afford the support staff they need and as a result see many less clients to sell significantly less life product. What an absolute mess.
The life companies are now finding out that inaction and not taking a stand for your valuable assets (advisers) has consequences. We tried to tell them, repeatedly and doggedly, but . . . deaf ears. Sadly, with the high rate of executive turnover at these companies, very few if any will be held to account for their crimes against the adviser community. They will soon be totally reliant upon their Robo-RiskAdvice. We’ll see how THAT goes. Someone should have told them to be careful for what they wish. By 2025 they will have it – robo advice and their statutory funds and not much else will they have – certainly no advisers selling their minimal commission stripped down products!
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