Insurers told to take more responsibility for industry sustainability
If sustainability is such a serious concern to life offices, then they should be doing more to address the problem rather than just increasing premiums and cutting commissions, according to Life Insurance Direct.
Russell Cain, the chief executive of Life Insurance Direct, said the onus of responsibility to improve the profitability of the risk industry should not be placed squarely on advisers by reducing remuneration and through increasing premiums.
“If life insurers do have a sustainability problem, then the onus should be on them to solve that problem,” Mr Cain said.
“Amongst other things, they could be innovating on product design and lobbying the government to ensure that things like stamp duty are removed from life insurance to make it more affordable.”
Mr Cain also said the recent financial reporting season has revealed that, “despite crying poor”, life insurer’s profits are still increasing.
“AMP reported one of the highest increases in profit – a 33 per cent rise in statutory net profits, as at 20 August – and they’re not alone,” he said.
Along with AMP, life insurers TAL, ClearView and ANZ all experienced increases across the life insurance businesses, Mr Cain said.
“Consumers should rightfully be asking how life insurers can say they are increasing life insurance premiums because their businesses are not sustainable, when their own evidence clearly shows they continue to make substantial profits.”
Mr Cain has previously questioned the motives of a “number of top insurers” that have expressed their intent to increase premiums to address issues of “sustainability”.
He added that, with the life insurance industry set to reduce adviser commissions, insurance premiums should be going down and not up, and that this leads to the question of whether life offices are “price gouging”.
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