The New Zealand Herald have reported on Income Protection price increases. Financial advisers have credited the changes to IP to the Australian IP market although COVID-19 has played a role in the change in pricing and the underwriting process. During the FSC digital Generations 2020 Conference, Kimberley Robinson from Swiss Re Australia warned that it was important that New Zealand insurers make amendments. Robinson highlighted that in Australia the regulator had to step in after losses totaled A$3 billion in a five-year period. Robinson said that the losses were a result of an increased focus on sales volumes, cross-subsidisation, a competitive market, and in some instances, insurers providing more benefits on claims before claim time.
At an industry conference held online this week by the Financial Service Council insurance underwriter Swiss Re warned that New Zealand insurers also needed to make changes.
Kimberley Robinson, product solutions leader at Swiss Re in Australia, said Australian regulator APRA had intervened after big losses in the sector which added up to around A$3 billion over five years.
"We have suffered losses on individual income protection on an unsustainable level."
Robinson said factors contributing to those losses included an increasing focus on sales volumes over profitability, cross-subsidisation of the product and a fiercely competitive market.
"In some cases we were providing customers with more benefit on claim than they earned before claiming."”
To tackle issues relating to sustainability and customer support, the FSC recently set up a CEO life insurance forum and ran its first meeting. Although Richard Klipin didn’t comment on the pricing of IP, he noted that the sector is not growing and that it is instead expanding sideways. Klipin highlighted that the challenge for the industry to transforming insurance into something that is relevant, affordable and accessible. He continued by saying that insurers need to focus on having the ability to deliver on the promise of cover
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