After a slew of problems that have cost insurers billions, the disability insurance sector now has “real momentum for change” according to Actuaries Institute’s Disability Insurance Taskforce.
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.
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