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17% decline in life/risk cover over 5 years

Mike Taylor18 April 2024
Male figure steps into gap

Recent structural and regulatory changes may have made the life insurance market more attractive, but the fact remains that significantly fewer Australians have life insurance than was the case seven years ago.

A presentation by publicly-listed life insurer, ClearView has pointed to the fact that only 77% of non-dependent working age Australians have at least one form of life insurance cover compared to 94% in 2017.

One of the most significant factors impacting life insurance coverage was the former Government’s Protecting Your Super legislation aimed removing default insurance from low-balance and inactive accounts.

What is more, the ClearView presentation, utilising data from the Council of Australian Life Insurers (CALI), also revealed the continuing life insurance gap stating 3.4 million Australians are under-insured to meet basic needs for income protection.

The presentation also noted the consolidation of the Australian life insurance sector which is currently comprised of 24 life insurers including seven onshore reinsurers and 10 friendly societies, down from 29 insurers and 12 friendly societies in 2018.

Dealing with the factors which had made the life insurance market increasingly attractive, Clearview cited capital changes imposed by the Australian Prudential Regulation Authority (APRA), product changes around income protection, material price increases on in-force income protection products and “recent data indicates the exodus of financial advisers has ‘bottomed out’.

It said that due to the improving industry dynamics and financial adviser productivity, new business volumes had grown for the last three quarters representing an “inflection point in the market returning to growth”.

Mike Taylor

Mike Taylor

Managing Editor/Publisher, Financial Newswire

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19 days ago

The life insurance market may have improved for insurers, but it is far worse for consumers. Consumers are now faced with much poorer quality products, that are less likely to pay claims, and have terrrible customer service. Consumers have far less access to affordable professional advice to help them navigate the insurance minefield. Insurers have less incentive to provide higher quality products, when there aren’t enough professional insurance advisers to explain their benefits and value to consumers.

It has basically been a descent into junk. Junk that is profitable for insurers, but will gradually reveal itself to be a disaster for consumers. Well done ASIC, Treasury, APRA, FSC, and Kelly O’Dwyer.

LIF Govt Fail
19 days ago

What changes have made it easier for Real Advisers to write Life Ins ? None
QAR is introducing more Red Tape via new Adviser Comms consent, that has already been disclosed and consented.
No doubt Protecting Your Super has significantly reduced Insured Australians.
Also note that the stats used are very broad and generic, no mention of LIF ?
LIF has seen premiums increase 100% in 5 years.
LIF Combined with FARSEA has massively reduced Risk Advisers and new Risk written.
How about get some more stats Mike.
Real Life Insurance has reduced 50% ?

Has Shoes
19 days ago
Reply to  LIF Govt Fail

My Level Premiums with One Path increased 300% since LIF and I recieved letters from ONEPATH / Zurich that they would be going up 100% over the course of the next two years (hence 600% increase over 7 years.
I promptly cancelled my cover.

18 days ago
Reply to  Has Shoes

Similar experience however due to health issues I am stuck with Zurich. Tried to make a trauma claim for cancer and they fought me all the way until AFCA forced them to finally pay after 4 months, including a payment for additional compensation due to their negligence and deliberate delays. Seems most insurers hike the premiums, reduce the service and look to make claims as difficult as possible.

16 days ago
Reply to  Tony

I am hearing more and more VERY BAD claim stories about Zurich!!! I have 3 clients myself that have been treated incredibly bad by Zurich. 2 IP claims(both of these men are now on long term claims going over 4 years so it was very obvious that they had legitimate claims) and then 2 clients with TPD claims where Zurich stalled 6 years before finally admitting that the clients were TPD as they were receiving long term IP payments.
Somehow advisers should keep a forum or register and start naming and shaming the offenders who don’t pay claims when they should.

Old Risky
16 days ago
Reply to  Has Shoes

I hope you did not buy the replacement from the same insurer

Has Shoes
15 days ago
Reply to  Old Risky

Timing was good, as I had just retired (fortunately), so I no longer needed the cover.

One foot out the door.
14 days ago
Reply to  Has Shoes

congrats on retirement

Big Barry
19 days ago

Forgot the most important part = LIF was introduced in 2017 and commenced in Jan 2018, this was a scam and with targeted financial planners with high churn rates based on a small number of financial planners ASIC did nothing to these people however used this cherry picked data to go on a campaign that financial advisers are evil and commissions should be banned. This was done on the basis cost of insurance would come down for customers however they have only gone up since 2017 some as much at 80 or 90% over three years with insurance companies just pocketing the difference in reduced commissions

Everything worked for everyone on higher commissions but the insurance companies got greedy and tried to cut financial advisers out of the process via call centers, this was going good until the royal commission stopped the hard insurance sales via call centers.

APRA have done a terrible job, we now have retail income protection policies that can only over 75% and group cover income protection policies that can cover 85%. I would love to see the numbers how the regulator assesses the profitability of these insurance companies eg can review retails change everything but make no recommendations regarding group cover which is also losing money according to the data yet TAL for example is the same insurance company for both retail and group for big industry funds.

19 days ago
Reply to  Big Barry

Astounding group policies were not targeted by APRA. Further proof the government want Industry Super to rule the world. Even recent QAR details from Treasury stipulate they want to cancel commissions, which is why they introduced this consent requirement for risk advice. Bureaucrat ideology at it’s finest!

Over it
19 days ago

Less advisers + crazy levels of compliance + super high premiums + stricter underwriting by product manufacturers = less insurance by Australians. SIMPLE!

Has Shoes
19 days ago
Reply to  Over it

Read somewhere that there are only 200 life insurance advisers left in Aus.
But thewre are unaccounted for numbers in certain AFSL’s that are using “ex-advisers” (who didn’t pass their exams) to (not advise / but really advise) their existing client base on their insurance needs…

19 days ago

This will be a great case study regarding government intervention, and unintended consequences to the detriment of the consumer! Bravo Australian Government! Bravo!

17 days ago
Reply to  XTA

What do mean ‘unintended’?

It’s a deliberate ploy to get all insto’s and all advisers out. Banks and union funds united on this issue.

19 days ago

Congratulations Canberra!!

Well done!! Fantastic outcomes…

Typical Stupidity
18 days ago

Meanwhile in the UK commissions increased to over 100% and the insurance level corrected. Australian Government Treasury and FSC are just so so dumb oblivious and ignorant. Not unintended consequences, predictable failures.