It comes after a 12-month examination of the sector by the taskforce into individual disability income insurance (IDII) found that ongoing losses by life companies whose sale of “complex products” is threatening the viability of the sector.
The taskforce’s latest and final report into the IDII estimates that insurance companies have lost more than $2 billion since 2018.
“Through its work, the Taskforce has developed a path forward for the industry. This will involve change and contribution by the many participants in the IDII ecosystem,” the report read.
“However, there has been very positive support for the work of the Taskforce, and the Taskforce is confident that there now is real momentum for change.
“The challenge now is to make it happen.”
The taskforce – led by senior actuary and former APRA deputy chairman Ian Laughlin – recommends consultation and feedback from policymakers and regulators, as well as insurers and consumer advocates.
“The Taskforce set out to have a customer-centric view and to commit to tackling issues from a professional and objective standpoint,” Mr Laughlin said.
“The Institute established the Taskforce to analytically assess the many factors at play in the retail disability insurance market and to manage a process where all parties tried to understand the issues and how to improve outcomes for customers.
“Nearly everyone we have engaged with and listened to, is aware that change is critical.
“The challenge now is to embrace the recommendations.”
Mr Laughlin added that IDII plays a “critical” role in the Australian economy as it provides financial protection against loss of income because of disability, particularly for self-employed and professionals who may not have other support systems available.
“But the IDII ecosystem today is not healthy,” Mr Laughlin said.
YEP AS PER BLOODY USUAL, DONT ASK ADVISERS.
Seriously the exact people they are asking are the instigators of LIF.
It’s going so well isn’t it.
[i]The taskforce – led by senior actuary and former APRA deputy chairman Ian Laughlin –
recommends consultation and feedback from policymakers and regulators, as well as insurers
and consumer advocates.[/i]
The end result of the task force will be the same as every other review completed in the past 14 years, complete and utter failure and its objectives not being met.
Agreed. This is because the taskforce “recommends consultation and feedback from policymakers and regulators, as well as insurers and consumer advocates”. That is, they are asking the same people that caused most of the mess rather than consulting actual consumers (not self proclaimed advocates with their own agenda) and their advisers.
LIF is a completely irrelevant factor in regards to the financial losses being incurred by Insurers in the IP space. Bring on the changes. They will offer improved outcomes for all stakeholders.
Sorry Anonymous, but LIF IS the problem. Its because the flow of fresh young FULLY UNDERWRITTENH LIVES STOPPED as LIF impacted. Insurers without fresh young lives coming in have a stagnant Statutory #1 Fund. Older clients keep claiming, as anticipated by the actuaries. Insurers jam up premiums on legacy products, and those insureds who need cover and WILL claim are left in the pool.
But when established risk specialist advisers choose not to write new policies under LIF because of a lousy 60%, and deal with a young demographic that really does not value life insurance, the capital risk is borne by the adviser because of the TWO YEAR CLAWBACK.
Its a no brainer for established risk specialists: keep reviewing existing clients and write increases at 110% on a one year clawback.
You know it makes sense.
Only ivory towered bureaucrats who are disconnected from the real world use the word “stakeholders”.
Its fair to say that IP needed some changes but the losses could have been very much mitigated if the FSC and insurers had not instigated the disastrous LIF resulting in record new business falls.
The key going forward is the protection of existing IP policy holders. Companies have been continuously gouging existing IP customer premiums over the last 3 years resulting in most seeing at least the doubling of their premiums if not more. Companies need to be stopped in their efforts to price existing customers into cancelling or replacing better products for worse.