The sad news that Integrity Life is closing its retail and corporate books to new business has generated a huge amount of interest this week…
Integrity Life has announced it is ceasing writing new business in the Retail Advised and Corporate Group channels.
A statement from the company says Integrity Group Holdings has announced that its wholly owned subsidiary Integrity Life Australia (together Integrity Group) would no longer be writing new life insurance policies in the Retail Advised and Corporate Group Insurance channels.
The Chairman of Integrity Group, Eric Dodd said that this “…has been a very difficult decision. The Board and the Integrity Leadership Team have been actively reviewing the strategic direction of Integrity Group and have considered and progressed a range of options.
“Protection of policyholders is critical and as such the Board has taken the difficult decision to close to new business in the Retail Advised and Corporate Group channels.”
Chief Executive Officer and Managing Director, Sean McCormack said: “I’m incredibly sad for the entire Integrity team and our many partners who have supported us, especially in recent years.
“This is not the news we’d hoped to share however the significant challenges of the Australian life market coupled with the realities of growing a business from the ground up mean that it is necessary. It is vitally important that we remain true to what’s most important, being able to protect and support our policyholders and their loved ones.”
McCormack continued: “With the support and confidence of our partners, and despite the challenges, we have achieved very strong growth since March 2021 – for this we’re very grateful.”
…Unfortunately, the Retail Advised channel has seen a substantial reduction in the number of Financial Advisers providing risk advice over the last five years…
“Unfortunately, the Retail Advised channel has seen a substantial reduction in the number of Financial Advisers providing risk advice over the last five years. The number of lives insured across all channels has substantially reduced and the market decline means that scale is critical. Achieving scale requires significant ongoing investment, and we have reached a point where it is not in either the policyholder or shareholder interests to continue to write new Retail Advised policies.”
He added that given the challenges with Retail Advised “…we have also taken the decision to cease quoting for new Corporate Group Insurance business, to maintain our capital for the benefit and protection of existing policyholders. Our commitment to claims is unchanged. We remain focused on supporting our existing policyholders and we are committed to looking after them in their time of need.”
The company says that for the Retail Advised channel this change will take effect from 29 September 2023. For the Corporate Group Insurance channel this change takes effect immediately.
“Other Integrity partnerships remain open to new business at this time. Integrity Group confirmed that for all Retail Advised and Corporate Group policyholders there will be no change to their existing insurance policy terms or conditions in accordance with the relevant Product Disclosure Documents (PDS) and Policy Documents. Claims processes will remain unchanged, and Integrity will continue to meet Life Insurance Code of Practice obligations.
Supporting facts
The statement also included a supporting facts section:
Retail Advised channel challenges
- Rainmaker Information, Australian financial adviser numbers, Sep 22 showed a significant decline in overall adviser numbers (26,500 (2019) to 16,671 (2022)) as a result of the Life Insurance Framework, increased education requirements and higher standards of conduct.
- Adviser Ratings in its 2023 Life Insurance Study found that as at 1 January 2023 there were 15,833 advisers in the industry. Of those, 150 only provided advice on life insurance and 949 were largely specialised in providing life insurance advice (together 1,099 or 7% of total advisers), and a further 2,372 (15%) provided some advice on life insurance.
- The reduction in adviser numbers has led to a reduction in the contestable new business pool from $532m (rolling 12 months to Dec 18) to $267m (rolling 12 months to Mar 23), per NMG Risk Distribution Monitor reports.
Change in lives insured Jun 18 – June 22:
- Retail Advised lives insured:
- Jun 2018 5.0m
- Jun 2022 4.1m Source: APRA Claims and Disputes statistics
- Change in Retail Advised lives insured by product Jun 18 – Dec 22:
- Death: –24.1%
- TPD: –16.7%
- IP: –15.5% Source: APRA Claims and Disputes statistics
Integrity Group recent growth:
- Mar 2021 Premium In Force $22.2m, ~59,000 lives insured
- June 2023 Premium In Force $140.3m, ~185,000 lives insured
Well, I most certainly hope that those who like to refer to themselves as ‘executives’ at the major life companies have THIS article come across their desk. I suspect they know the dire situation most of them are, or will be, in regarding new business slumping. It is all nothing less than what I’ve been saying on these pages for years. The self-satisfied life company execs sat on their pudgy little hands and did nothing to stop the inexorable march to TWO year commission clawbacks and the ludicrously low commissions that saw most all of the experienced life writers leave in disgust – yours truly included there. Now . . . THIS.
I never dealt with Integrity life so can’t say anything about them. Have to admire a start-up though, especially one in the life industry. I just hope this is putting a chill up the spine of the major life groups as they realize how WRONG they were to think they could financially rape risk advisers with unsustainably lower commissions and longer clawback periods – just because they could – and blame the government. Yeah, right – the life groups could have fought back but instead they were silent with profits before adviser relationships. Makes my blood boil that they did this!
Life companies, for the 164th time: THE ANSWER TO FIX THIS MESS IS THIS:
1) RETURN COMMISSIONS TO 100% UPFRONT (80% simply isn’t enough to grow a business or start out in the profession)
2) RETURN COMMISSION RESPONSIBILITY TO 1 YEAR MAX
3) LOBBY LIKE YOU’VE NEVER LOBBIED BEFORE TO REMOVE THE ASIC LEVY AND REMOVE ALL EXTRANEOUS/IRRELEVANT COMPLIANCE FOR ADVISERS.
ANYTHING LESS THAN THE ABOVE 3 POINTS IS DOOMED TO FAIL BY 2026-27. You can indefatigably bet your business on that.
Without the above 3 points being enacted the life industry as we’ve known it is dead and with it are the life companies.
We all told them this is what would happen due to their tardy advocacy. Now here’s proof – one of the first pins to fall – poor ol’ Integrity. These failures will accelerate towards 2026 with life companies merging to head it off but that won’t work. New business still has to come in the front door and they’ve thick-headedly made that impossible for specialist risk advisers to provide due to the past arrogance and greed of these life groups. Time to pay the piper . . .
P.S. I don’t have a dog in this fight, I’m out now so whatever happens is no skin off my nose at all. I am however still concerned for advisers who will suffer and their clients. My comments are simply based on my time in the industry, knowing the major players (good and bad actors all) and of course knowing, well, the adviser force of risk specialists. Mark my words, nothing less than enacting ALL of those 3 points will do any good at all.I’m writing this in the hope there’s still some spark of common sense left in at least one of the major life groups. It will only take ONE to do this stuff right – lobby hard – and the others will follow. Politicians WILL take more notice of life companies than of the advisers. I’m hoping they read this article and comments. Sadly, nothing else seems to be working!
I support the comments made by Squeaky 21 and in the interests of brevity, I won’t repeat them.
What was the most revealing about yesterday’s press release was the statistics surprised by NMG consulting which revealed the true damage inflicted on our industry by LIF. There is a lot of BS sprouted in this industry by people who specialise being deceptive with words as to what is really going on in the process of pushing their own barrow, or seeking to jack up the shareholder value, with the consequential increase in their bonuses.
In June a report from Plan for Life told advisers what we already knew – insurers that have faced with a massive reduction in fresh new business are filling their boots into their Statutory #1 Funds by gouging the premiums of existing legacy policyholders. ASIC are supposed to be investigating that matter, but don’t hold your breath.
Recently there was an announcement by Zurich where it is obvious that the massive decrease in life risk NEW BUSINESS has generated a number of retrenchments. It’s happening quietly but obviously in every other life company, because of that 60% reduction in underwritten retail advised new business. Underwriting numbers are decreasing, new business processing is a mere shadow what it used to be.
An ongoing experience with Clearview where a client had a loading/exclusion removed new evidence, and is subsequently incurred a corresponding increase in premium should have been easy, only for the system to dictate that a new policy had to be issued, when the current monthly premium expires. That used to be called a system problem, but it looks like reduced resources to me.
But the figure that hit me hard was the reduction in CONTESTIBLE NEW BUSINESS POOL down from $532 million in 2018 , reducing to $267 million in Mar 2023. Retail lives insured down by nearly $1 million . The change in retail advised lives by product shows a 24% reduction in death cover 16% in TPD and 15.5 in IP with those figures being collected to the end of December 22.
I suspect those IP figures do not really show the impact of the NUCLEAR OPTION taken by Apra in income protection in October 2021
Yet still there is no move from CALI or anyone else (FSC?) to go to the government, hand on heart, and admit that LIF was a total and abject failure and that pre-LIF commissions and clawback periods should be re-stored immediately
It seems the CEOs of our life offices all belong to the Black Knights club – “it’s only a flesh wound”.
If this downward trend, which is completely attributable to LIF, continues then I suspect within five years will only have three life insurance companies operating and licensed in Australia. Some competition! Watch out for the cartels!
My jaw hit the floor a few times reading through this Oldie. Thanks for the update, extremely interesting but beyond sad.
This news is nothing short of alarming—it’s the proverbial canary in the coal mine. This is a sign that the entire ecosystem is on shaky ground.
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