A major life insurer will soon launch a new “sustainable” disability insurance product to market in line with recent restrictions placed on life companies by APRA.
In a statement, AIA Australia chief executive Damien Mu said the prudential regulator’s announcement that it would place capital penalties on insurers from this month to push them to reform their income protection products had provided important “clarity” to the market.
The news came following an Actuaries Institute taskforce review of the income protection insurance segment, which concluded that it was at risk of failure unless serious changes were made to product design.
“There is a clear need for simpler products that continue to meet customer needs and deliver value,” Mr Mu said.
“We acknowledge and support APRA’s views, and now it is up to the industry to step up, using the work of the taskforce and APRA’s latest communication to insurers to move forward.”
Mr Mu said the insurer would be launching a new sustainable disability insurance product in the coming months, and that AIA also believed advisers had an important role to play in ensuring the future sustainability of the industry.
“The taskforce’s recommendations show that the issues inherent in disability income insurance are broader than simply product design, and we all have a role to play in seeking improvements,” Mr Mu said.
“The detailed ecosystem highlights the important role of financial advice and advisers in helping their clients to get access to the appropriate cover to meet their needs.
“While all organisations will take specific action, we want and need to work closely with advisers, industry bodies including the Financial Services Council, other insurers, and regulators to ensure we can continue to deliver affordable and sustainable disability income insurance to Australians into the future.”
Mr Mu added that life insurance was a “community good” and that AIA Australia was “committed to ensuring the sustainability of our products”.
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