![\"\"](\"https:\/\/riskinfo.com.au\/news\/files\/2013\/08\/Alain-Neemeh-23.jpg\")
<\/a>President and CEO of RGA Canada, Alain N\u00e9emeh<\/strong>, said while it was normal to see some progression in the area of non-medical limits over time, he could not understand why Australian insurers have raised limits by 150% over the past five years.<\/p>\n Speaking to an audience of senior insurance industry stakeholders at the recent Financial Services Council Annual Conference, Mr N\u00e9emeh addressed the issue of sustainability. He said he had heard a lot about agents\u2019 commissions and clawbacks, but suggested that the industry additionally needed to look at a number of different areas for a solution to its sustainability problems.<\/p>\n \u201cAre agent commissions the big issue, or are there a number of other issues that contribute, and did we allow these things to actually happen in the market?\u201d he asked.<\/p>\n One of these other issues, highlighted by Mr N\u00e9emeh as a source of significant concern, was what he described as Australia\u2019s \u2018generous underwriting\u2019.<\/p>\n \u201cIn terms of generous underwriting limits, you can see some progression from 1997 to 2007, and I think that\u2019s normal, it\u2019s evolutionary.<\/p>\n \u201cBut when you look at the changes that have occurred from 2007 to 2012, from an outsider\u2019s perspective, they\u2019re difficult to understand. Earnings of individuals have increased around 21% over that time period. It\u2019s not clear why non-medical limits need to go up by 150%,\u201d Mr N\u00e9emeh said.<\/p>\n \u201cI would argue at some point that the underwriting becomes weaker and weaker since you lose some of the value of upfront selection.\u201d<\/p>\n In comparison, Mr N\u00e9emeh said that the Canadian market was talking about moving its underwriting limits above $500,000 per policy.<\/p>\n \u201cThere\u2019s certainly been evolution and innovation here, in terms of the underwriting limits and requirements. But is this a trend that is sustainable?\u201d<\/p>\n Mr N\u00e9emeh said he was also unaware of any other insurance market which operated with transfer terms that matched the Australian market. \u201cYou\u2019ve got to ask yourself why would you take a $3m risk onto your books without underwriting it. It\u2019s just not something that I\u2019d be comfortable with.\u201d<\/p>\n He urged the Australian insurance industry not to focus on exact solutions, but to identify the problems contributing to the sustainability risk and demonstrate strong leadership by taking action.<\/p>\n \u201cIt\u2019s time to act. It\u2019s not just commissions or rating houses or any one thing; rather a fundamental rethink is necessary. The industry is in a good place to do that, and does control its destiny, but it\u2019s time to act now.\u201d<\/p>\n <\/p>\n","protected":false},"excerpt":{"rendered":" The long-term sustainability of Australia\u2019s high non-medical underwriting limits and transfer terms has been questioned by an international expert.<\/p>\n","protected":false},"author":7,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[241,3,230],"tags":[],"class_list":["post-22207","post","type-post","status-publish","format-standard","category-conferences-and-events","category-general","category-underwriting"],"_links":{"self":[{"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/posts\/22207","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/users\/7"}],"replies":[{"embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/comments?post=22207"}],"version-history":[{"count":0,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/posts\/22207\/revisions"}],"wp:attachment":[{"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/media?parent=22207"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/categories?post=22207"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/tags?post=22207"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}It\u2019s not clear why non-medical limits need to go up by 150%<\/h6>\n
… a fundamental rethink is necessary<\/h6>\n