The figures from Plan For Life revealed that inflows into the lump sum sub-market fell 2.0 per cent over the past year with mixed company-level results.
Among the market leaders, AIA (7.1 per cent), ClearView (7.0 per cent) and MLC (2.1 per cent) experienced positive percentage increases in their inflows, while the remainder reported minimal or negative growth.
In contrast to the falling lump sum market, risk income inflows experienced growth, albeit marginal, up 0.3 per cent over the past year, Plan For Life said.
Among the better performers in risk income inflows in percentage growth terms were ClearView (17.7 per cent), AIA (8.6 per cent) and Zurich (3.1 per cent).
Overall group risk premium inflows experienced a 9.7 per cent fall over the past year, something Plan For Life said was largely due to the impact of ‘Protecting Your Super’ legislation, which came into effect during July.
However, of the larger companies, MetLife (5.4 per cent) and TAL (1.4 per cent) still managed to record some growth, according to its figures.
“It should be noted that individual company growth can be significantly impacted by super fund insurance mandate movements,” Plan For Life said.
What did we all expect? I mean really? With the insurers deserting their advisers with slaps in the face like a 2 year responsibility period (counter to corporations law!), heavy commissions reduction to 50% (no, not 66%, do the proper maths) and punitive education standards of 90%+ irrelevancy to risk advisers – what the hell did they expect. This is only the beginning. The way life companies are increasing premiums is like wild animals eating their young – their future – which very shortly will cease to exist. This time it IS different. Been around long enough to say all this with some authority – the top management in most companies now are possessed of the present and make zero decisions based on long term growth. As bad as politicians now.
The rot started with the ASIC Report 413 and their deliberately manipulated strategy to obliterate Life Insurance commissions through claiming that a nationwide churning issue existed and this was the primary cause of widespread advice issues and the cause of consumers not receiving advice in their best interest.
From that point, the contrived and conflicted process fully supported by the FSC and in the majority of cases, the Life Insurance companies as FSC members in combination with Trowbridge, Kelly O’Dwyer and left wing consumer and legal groups driven by a fanatical, evangelistic belief in the abolition of commission as an ideological saviour of the consumer, proceeded to oversee the gradual demise of the Life Insurance business for no good reason at all.
As Kelly O’Dwyer repeated on so many occasions the LIF changes would result in enhanced consumer outcomes,
it is difficult to see how a rapidly declining specialist and experienced adviser base and a rapidly increasing and unsustainable premium cost base will result in anything other than the consumer having little access to professional and experienced Risk Insurance advice which will in turn result in hundreds of thousands of Australians being either uninsured, underinsured and reliant on the public purse in the event of unforseen circumstances that will potentially destroy them financially.
When the uniformed make decisions driven by political purpose rather than logic and reason, mistakes are made and the consequences are suffered by others, not those who made the error in judgment.
The whole process could and should have been addressed significantly better than the current result, however, no matter how hard advisers attempted to appeal to a sense of reason, calm and well thought out process, there existed a clear determination to impose a destructive and ideologically flawed change for change sake, irrespective of the consequences.
The consequences so many informed and experienced industry professionals predicted are now well and truly in play.
Sometimes it is important to listen to those who know.
We are born with two ears and one mouth for a reason….they should be used in that order.
And how much more will these new Life business rates drop as the older Life only advisers are forced into early extinction from LIF and FARSEA.
Awesome work Over Bloody Complicated ODwyer and FSC.
If you read into this its a lot more serious. Bear in mind that these same insurers have been hitting existing customers with unprecedented premium increase of as much as 30% then it shows a very bad picture. Lets say average existing customers hit with 20% increases and the insurers are only showing same or slightly negative growth after new business then it shows that lapses and cancellations are at an all time high and new business isn’t covering it.
Lets also bear in mind that with the new LIF rates new business rates will drop further.
This will result in further increases to existing customers and higher lapses and further negative growth.
Its like watching a train wreck. Well done to the FSC for killing the market and increasing underinsurance!
The article talks to group life being the big negative (not unexpected with the group under 25 opt in legislation) but this was for the year to September 2019 so the impact was only there for one quarter and even then it would have taken at least 30-45 days to turn them off. Very scary numbers for life companies but their books should be so much more profitable as the LIF framework got rid of all that churn they were so worried about. Well done FSC
I suspect that there is more to this than the basic statistics show. i am waiting for the “other shoe to drop” on this one, and I suspect it won’t be pretty
Do you want to be a bit more vague?