A World Of Pain For Life Insurance
A world of pain for life insurance
The life sector was front and centre during COVID-19 as consumers, through a variety of experiences with death, illness, or losing work due to the economic crisis, “suddenly” woke-up to the entire life insurance topic.
We found many more clients asking about personal insurances, as COVID-19 had everyone reaching for their policy documents, in the same way consumers pore over T&Cs in their house insurance policies after a bushfire or flood.
Sales were down an estimated 10% for 2020 according to recent Plan For Life data and life insurers are playing a game of chicken with each other on repricing in order to get back towards profitability, although these premium step-ups have commenced and are understandably being met with great concern by many.
The consolidation in the life insurance industry has reduced the choice for many, with remaining players struggling with performance. However, this has played into the hands of new players as they are unconstrained by legacy systems and back book claims, and they have naturally focused on delivering great customer experience through their investment in technology, underwriting flexibility and value for money.
With premium increases of up to 40% by some insurers, many are understandably upset about these sudden jumps.
The practice by many insurers of offering first & second year discounts have not been well received by many. This practice is encouraging clients to change insurance providers every 2-3 years to ensure they are not subject to the significant premium increases.
However, for many that have had medical or health issues since the commencement of their policy, they remain stuck with their current insurance providers and are subjected to these significant premium increases.
The personal insurance sector is starting to look similar to the personal health insurance industry.
With commissions for financial planners decreasing, many Australians are not getting the advice they require and remain underinsured.
As there is not a continuous stream of new policies or inflows for the insurance industry, insurers have continued to increase their premiums to support themselves getting back towards profitability.
This should be a huge concern for all Australians as many are starting to get priced out of owning personal insurance.
The rising premiums are a reflection of the consequences of the Government intervening into a market without a great deal of concern for the consequences.
The Newcastle Advisors team hopes the Federal Government has sufficient resources available to support those Australians that have had to cancel their personal insurance policies due to their intervention.
