Recently we reported that Income Protection prices are on the rise as a result of the Australian market and COVID-19. New Zealander insurers are now being urged to amend processes and premiums before regulators intervene and introduction mandatory guides. Partners Life begun the conversation when revealing that it has increased IP premiums by 12% and made policy changes. Kris Ballantyne, chief marketing officer, has said that Partners wishes to offer affordable policies that customers can maintain for as long as they need. AIA and Cigna have both noted that they aren’t looking to introduce significant premium increases.
“It took insurer Partners Life to break the silence last month when it revealed a brave plan to start publishing the content of discussions with the Financial Markets Authority.
In doing so, it revealed it lifted its income protection premiums by 12 per cent in the past year, and had made policy changes, including not allowing self-employed people to any longer select an “agreed value” of income to be covered, instead limiting cover to actual loss of earnings.
Partner’s Life’s chief marketing officer Kris Ballantyne said the company was a “first mover” on income protection, driven by wanting to provide policies they [consumers] could afford to keep as long as they needed it.
It was a big challenge as there were a lot of agreed value policies covering self-employed people, and owners of small businesses.
Neither of its two big rivals, AIA nor Cigna, was expecting to make such large premium increases, though AIA had stopped selling new policies in which the income covered automatically increased by 5 per cent a year.
AIA chief product officer Len Elikhis said that over time, “the insured’s benefits would creep up and approach the insured’s income”.
Shane Burdack, senior underwriting consultant as Swiss Re Australia highlighted that customers with significant wealth had very little incentive to return to work when on claim, resulting in increased premium prices.
“Swiss Re senior underwriting consultant in Australia, Shane Burdack, said that in New Zealand insurers gave little thought to the net wealth of policyholders.
Yet people with significant wealth – sometimes through investments, sometimes because of payouts from other insurance policies – had a low incentive to go back to work, and stayed “on claim” for longer driving up costs.” Click here to read more
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