In an address to the Insurance Council of Australia’s virtual industry forum on Wednesday, Helen Rowell said APRA has been encouraged by the effort insurers are putting in to better communicate with their clients which will help bridge “what has emerged as an expectation gap” between companies and customers, but that there is another issue that must be addressed.
“Along with an expectation gap, there is a clear protection gap looming that is potentially larger than perhaps we have observed in the recent past,” Ms Rowell said.
“This is not necessarily a problem confined to Australia and is one our peer regulators offshore also grapple with. Of course, it is entirely within an insurer’s rights to decide which risks to select, and which to avoid.
“However, when risk exclusion and avoidance burgeon across multiple products and insurers, it leads to prices that are unaffordable, or products that are simply not available. The obvious impact to consumer confidence, the wider economy and prosperity follows.”
Ms Rowell added that factors contributing to declining affordability and accessibility are complex and called for collective action from regulators as well as federal, state and local governments.
APRA’s corporate plan reiterates the importance of insurance to financial stability, which specifically notes insurance accessibility and affordability as of one of the key priorities over the next four years.
“Our focus here is on building the evidence base to better understand the issues, and magnifying our influence on contributing to a solution,” Ms Rowell said.
“This includes leveraging our supervision insights and system-wide perspective to advise stakeholders on the nature and extent of accessibility and affordability issues, and the risks that exacerbate these challenges.”
“Looming” problems? “Building the evidence base to better understand the issues”??
Talk about fiddling while Rome burns. Income protection insurance is already in a death spiral.
The total ignorance and incompetence of APRA, The FSC and the insurer “leaders” is quite astounding.
Before the LIF we didn’t have a perfect system but what we did have was:
1. Insurers making a profit even in IP
2. Underinsurance better than it was today and improving
3. Reasonably affordable quality products
4. Specialist risk advisers who were able to guide customers through the maze of needs and requirements under a commission system that didn’t require fees to be charged and customers put off advice due to cost.
Since the LIF we have:
1. Insurer profits plummeting
2. Customers being hit with increase after price increase and a surge in lapses and cancellations
3. Worsening products, worsening pricing and worsening underinsurance
4. Risk advisers leaving in droves and planners avoiding risk advice
It wasn’t a perfect system and needed improvement but the so called experts have decimated a once important industry.
“This includes leveraging our supervision insights and system-wide perspective to advise stakeholders on the nature and extent of accessibility and affordability issues, and the risks that exacerbate these challenges.”
Here comes the market failure when the government start to intervene in an industry.
Too late, LIF already let this horse bolt.
Dear, dear, dear Helen….your level of misguidance, misunderstanding or ignorance is beyond belief. APRA and LIF are the two largest contributors to the decimation of the life insurance industry.
I wish you all the best with fixing “insurance accessibility and affordability as of one of the key priorities over the next four years”. Based on current trends, the life insurance industry may not exist in 4 years, if not sooner!
What a truck load of words that mean absolutely nothing at all.
APRA have NEVER considered Risk advisers as Stakeholders in the welfare of the life insurance industry
I have a message for APRA. Invite a few Risk Specialists in for an off-the-record chat. We know whats wrong with the industry
Yes! Risk Advisers performing the same role for decades vs the corporate types just passing through on their road to greatness. Unfortunately, we all know who has a seat at the table.