{"id":66167,"date":"2023-06-13T16:56:47","date_gmt":"2023-06-13T05:56:47","guid":{"rendered":"https:\/\/riskinfo.com.au\/news\/?p=66167"},"modified":"2025-03-14T12:02:23","modified_gmt":"2025-03-14T01:02:23","slug":"call-to-rethink-life-insurance-as-an-investment","status":"publish","type":"post","link":"https:\/\/riskinfo.com.au\/news\/2023\/06\/13\/call-to-rethink-life-insurance-as-an-investment\/","title":{"rendered":"Call to Rethink Life Insurance as an Investment"},"content":{"rendered":"
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While the Quality of Advice Review decision was the biggest news this week, our story on a new and very different way of considering life insurance performance was adjudged to be the Riskinfo Story of the Week…<\/h3>\n<\/div>\n<\/div>\n

The life insurance industry is being challenged to reconsider the manner in which its performance should be assessed, to maximise returns for insured lives.<\/p>\n

Not for the first time, specialist insurance risk firm Retender<\/a> is presenting the market with a new perspective, which in this case explores how key stakeholders might approach the assessment of life insurance performance if it were considered as an asset class – as an investment – rather than as a cost associated with risk protection.<\/p>\n

In its just-released paper entitled Life insurance as an Investment<\/a>, Retender suggests that an asset management-style lens could be applied to investigating past life insurance pricing changes “…which, although not a guide to the future, is the best available information to form a starting point.” In doing so, it lays down a challenge to the sector around why and how industry stakeholders including retail life companies, trustees, dealer groups, and advisers might utilise an entirely different approach to determine the best outcome for insured lives not only today, but in the future.<\/p>\n

Retender Legacy Rate Index<\/strong><\/p>\n

Included in this new set of proposed performance markers is analysis of legacy business to which a significant proportion of all insured lives are currently tied.<\/p>\n

Called the Retender Legacy Rate Index, the firm’s co-author of the paper, Kim Clough<\/strong>, believes cost pressures on life insurance premiums will continue, and that this index is one way to monitor and benchmark pricing trends applying to each life company’s historic books of business, thereby providing a starting point for analysts to project future pricing trends that may apply to these legacy cohorts.<\/p>\n

The paper continues the analogy of applying an investment analysis lens to life insurance in discussing diversification, asset allocation and the volatility of the underlying ‘asset’ or insurance pool, such as when comparing the sometimes huge premium differentials offered to insured lives within super funds in particular.<\/p>\n

The ability to move consumers between insurance products, a form of rebalancing, is another problematic topic considered in this paper, where its authors effectively call for greater opportunities for advisers to actively manage insured lives to consider transfers between different insurance pools subject to their historic performance benchmarks and their projected future performance.<\/p>\n

The paper asks the reader to come to the table with an open mind as to what may be possible in a future where life insurance performance is considered through an asset management lens, and offers much food for thought.<\/p>\n

Click here<\/a> to access the paper Life Insurance as an Investment.<\/p>\n

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The Retender Legacy Rate Index …predicts aggregate legacy costs will increase in the order of 21% next year and on average around 17% p.a. over the coming years<\/figcaption><\/figure>\n","protected":false},"excerpt":{"rendered":"

While the Quality of Advice Review decision was the biggest news this week, our story on a new and very different way of considering life insurance performance was adjudged to be the Riskinfo Story of the Week… The life insurance industry is being challenged to reconsider the manner in which its performance should be assessed, […]<\/p>\n","protected":false},"author":3,"featured_media":66200,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3,8291],"tags":[],"class_list":["post-66167","post","type-post","status-publish","format-standard","has-post-thumbnail","category-general","category-story-of-the-week"],"_links":{"self":[{"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/posts\/66167","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\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/comments?post=66167"}],"version-history":[{"count":0,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/posts\/66167\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/media\/66200"}],"wp:attachment":[{"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/media?parent=66167"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/categories?post=66167"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/tags?post=66167"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}