Data confirms life/risk policy churn a distant memory
Life insurance policy churn has been all but eliminated, according to the latest analysis from specialist life/risk research house, Dexx&r.
The data, released this week, confirms decreasing rates of policy change over the past decade, most of which has been influenced by the imposition of the Life Insurance Framework (LIF).
The Dexx&r analysis shows that the attrition rate with respect to lump sum premium premium discontinuances has been in decline since 2015, with the most significant declines between 2015 and 2020.
Dexx&r principal, Mark Kachor told Financial Newswire that the declining attrition rate was substantially attributable to declining rates of churn which had been influenced by client best interests and the imposition of the LIF.
A similar pattern was evident with respect to the attrition rate for disability insurance.
Dexx&r’s attrition rate is derived from a calculation of discontinuances as a percentage of in-force premiums.
The Dexx&r analysis for the 12 months to September 2022 showed that total Individual Risk new premiums decreased by 9.0% to $1.30 billion.
Total risk in-force premium increased by 3.1% at the end of the year to September 2022, up from the $15.8 billion recorded at September 2021 to $16.3 billion at September 2022.
Japanese-owned life insurer, TAL has continued to dominate the Australian life insurance sector, according to the latest Dexx&r analysis.
The analysis reveals that TAL accounted for 32.5% of the Australian life insurance market as at September, last year, with $5.28 billion in in-force annual premium, followed by AIA with 19.9%, Zurich/Onepath with 14.6% and MLC Life with 11.6%.
“Total risk in-force premium increased by 3.1% at the end of the year to September 2022”. WOW, less than the average annual increase in premiums for the same period!
Those remaining 200 life insurance salespersons must be working themselves half-to-death!
“..declining rates of churn which had been influenced by client best interests and the imposition of the LIF.”
No, I would say its because time consuming (unnecessary) compliance, poor/reduced remuneration, reduction in quality of cover (for IP its better to retain rather than switch to the junk they have now), and harsher underwriting that has stopped a lot of advisers changing their clients policies.
We all know that churn was never an issue to begin with anyway.
LIF has been a “raging success.”
In the mortgage and general insurance industry, shopping around and switching to a better provider is regarded as being in consumers’ best interests. But when life & disability insurance advisers did it, it was given the pejorative name “churn”. It was demonised by regulators, who were more focused on persecuting advisers than looking after the best interests of consumers.
The reason so called “churn” has stopped is nothing to do with LIF. Product switching has stopped due to the big decline in quality of newer products. It is rarely in consumers’ best interests to switch anymore. Lapse rates might have declined, but in the past many “lapses” were consumers switching to better products. Now, most lapses are consumers abandoning insurance altogether.
I’m sure all but the 200 active insurance salespeople will agree 100% with you Anon…
No policies being written at all, let alone churn. Who wants to work at a loss and place clients in ever increasing diluted and reviewed definition toilet insurance?