Underlying net profit after tax for ClearView’s life insurance business for the half-year ended 31 December 2019 of $8.7 million, according to a statement to the ASX.
However, that result was adversely impacted by an adverse claims experience of -$4.7 million and an adverse lapse experience of -$1.4 million.
Key contributors to the poor lapse and IP claims experience across the industry, according to ClearView, include poor wages growth, rising consumer costs, step premium rating structures, IP product design issues, societal trends such as mental health and employment trends, and reducing interest rates.
As a result, ClearView said it has already commenced a comprehensive review of its LifeSolutions IP product series with a focus on reviewing product pricing and design.
“As a first step, by 31 March 2020, ClearView will cease the sale of agreed value contracts for IP and in 2H [financial year 2020] will launch a new indemnity type IP product to offer a lower maximum monthly benefit at a competitive premium rate,” it said.
“It is highly likely that further price changes will be made in the coming months to reflect increased claim rates.”
ClearView said the repricing of the product and a detailed review of the claims assumptions are also underway.
It also added that any further increases to the claims assumptions are intended to be recovered through premium rate increases which should sustain profit margins and therefore the underlying embedded value.
“However, while further analysis continues to be undertaken, the revised assumptions are expected to have an upfront adverse impact on the reported incurred claims reserves,” ClearView said.
“The current estimate of the potential impact on the 2H FY20 underlying NPAT in respect to the incurred claims reserves at 31 December 2019 is expected to be between $2 million to $3 million after tax. The repricing is intended to be implemented in 2H FY20.
“A further update on these initiatives will be provided in due course.”
The bigger issue is that now APRA has said no more agreed value IP to age 65 all existing client holders will be held to ranson by ALL the insurers.I know that is hard to believe! The premiums will rise and clients can’t buy similar cover. Asteron just sent through renewals for IP after April with a 16.7% rise. Brace yourselves.
Nothing to do with trying to buy business a few years ago
They have increased level premiums 3 times in the last 4 years and now more increases to come. I used to be a big supporter of CVW but their admin is hopeless and they stuff up things on a daily basis.
margins on Life insurance, particularly IP are small, and they dont deny a lot of claims so its a tough business, especially with a spike of MH claims.
Agreed and i know there are a lot of variables including low interest rates etc. Unfortunately all insurers increase level premiums but none that i know of (excluding AMP) that have done it as often as Clearview. This combined with their constant admin errors are making them a lot harder to support.
Also Mick, the Life insurance market is so competitive with the Real Insurance rubbish, its a race to the bottom on pricing because clients dont want to pay for it – however if your healthy and under middle age, insurance is cheap as cheaps…people dont see the value in it as they use to. Not sure why..
what an odd article. no reference to the fact that this is a government ruling.