One of the few references to life insurance in APRA’s Annual Report cautions that the work required by the life insurance industry around the long-term sustainability of individual disability income insurance must be ongoing.
In his foreword chair, John Lonsdale, notes APRA’s program of work to support the long-term sustainability of individual disability income insurance continued during 2023-24.
“While progress has been made, resulting in a reduced capital requirement for a small number of insurers, the work required by industry is ongoing,” he says.
Further within the report under “Life Insurance” the regulator says it has “…maintained IDII market monitoring activities and taken appropriate action where there were concerns with specific products or market behaviour.”
The report also states that during the year APRA had expressed concern to the life insurance industry about failures to sustainably design, price and manage life insurance products.
“APRA, together with ASIC, reviewed practices that relate to premium increases, particularly in level premium products. Findings and expectations were published in December 2023.” (See: Regulators Crack the Whip on Premiums).
The only other specific mention of life insurance noted in the 129-page report was under the subtitle “Superannuation transparency and retirement outcomes” where the report says APRA commenced scoping work to consider implications for the life insurance industry and to enable life insurers to contribute towards a meaningful retirement income market.
“To support access to a range of retirement products, APRA sought to understand the challenges for insurers in offering longevity products and has identified learnings from international markets that could be applied to Australia. During the year, APRA has engaged entities with experience or interest in longevity products including through a survey, roundtable discussions and individual meetings with entities.” (see: Addressing Longevity Risk Presents Opportunity for Life Industry).
Click here to read APRA’s 2024 Annual Report.
I wonder if, Mr Lonsdale, as the new chair of Apra, you think it might be appropriate that this time Apra might consult the people at the front on changes to IP.
They are called Life Risk Specialists, Mr Lonsdale, and they have a hell a lot more experience around IP than some of your folks at Apra.We can tell you things about the behind-the-scenes operations of life insurers that you won't hear across your board table meetings with the bonus-driven CEOs of life insurers
And while you're at it Mr Lonsdale, you might care to ask a few questions of those same life insurance CEOs as to why they think it's a good idea to "gouge" premiums on existing policyholders for any sort of life insurance
And how can long-term sustainability of IP ever be achieved when most insurers are engaging in un-declared Duration Based Pricing, where after 2-3 years the premiums have gone through the roof, and the life insured is seriously considering disconnecting from the farce.
Doesn't sustainability require policyholders to remain in the pool.
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