Insurance Premium Update
The Australian Life Insurance Industry is continuing to see a higher incidence of claims than expected for income protection insurance and that people are remaining on claim for longer periods than in the past. APRA has recognised this and has challenged the industry to review and manage their insurance portfolios.
In response to APRA’s instructions, many insurers have reviewed their current policies and future policies. This had led many to increase their base premiums across the majority of their products, with Income Protection being specifically targeted. Some increases are up to 35% on prior year premiums.
This is all in a bid to strengthen the stability of the industry and ensure future claims are met. The insurers have a myriad of in-force policies, which have numerous different pricing series of their products over several years. This means that the base premium pricing for the same products may be different depending on the commencement date. The premium increases have been based on a number of factors including age of the life insured, the type of cover held, how long the policy has been in-force, premium structure to name a few.
Some insurers are communicating with their clients, unfortunately some are not; and the only notice clients are receiving regarding their increase is part of when they receive their anniversary/renewal letter. With the anniversary/renewal letter not really detailing the percentage of the increases being applied. There are some insurers that have been communicating with their clients, however the time between receiving the notification of the intent to increase the premiums to when the policy next has an anniversary could be months away.
Whilst Life Insurance is the foundation of any financial plan, providing the essential protection for life’s unforeseen events. It is also equally important to review your insurances to ensure they remain appropriate for you and your family. Should you wish to review your policy, please contact Luka Financial on (02) 6883 2200 to arrange an obligation free appointment.
Charles Agnew
Risk Adviser
Luka Financial Pty Limited is a Corporate Authorised Representative (No 441690) of Capstone Financial Planning Pty Ltd. ABN 24 093 733 069. Australian Financial Services Licence No. 223135