Life insurance premiums to rise

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The cost of life insurance premiums are set to rise for Australians over the next two years. But what is causing this rise?

The rise is expected to be around 5% for the next two years, making a typical premium $265, and this is to meet the demand for stress and depression related payouts by white collar workers.

Experts claim the pricing for superannuation insurance sector is playing catch-up with the broader retail insurance sector as its margins are being eroded by the rise in claimants.

"Over the previous four to five years prices have fallen by about 15-20% and this has seen a flood of people sign up with almost five million super accounts now including insurance," Rice Warner Actuaries Thierry Bareau told news.com.au.

"And as a result we now expect premiums to rise annually by about 5% over the next two years."

However, chief executive of life insurance specialists TAL Australia Jim Minto estimates the yearly premium increases may be closer to 10-15% over the next three years for some funds.

"In some funds, particularly aimed at office workers, this can be as high as 50%," added Minto.

 

  • Mark Thompson on 17/01/2013 10:07:20 AM

    Well if TAL had not taken on Ausralian Super Group Life with rates 50% cheaper than retail then maybe they wouldn't have to remedy the premium imbalance now.

  • Rob Jason on 17/01/2013 1:00:35 PM

    MT's comment is quite right. Perhaps if the retail market stood up to the industry funds and made them pay a TRUE cost instead of chasing growth at a cost to their other business then the whole market would be better off.

  • john minto on 17/01/2013 7:40:50 PM

    Pricing needs to be approached responsibly and sustainably to ensure that all insurers are around to pay claims when needed most. Price driven market share plays won't help address underinsurance or promote professionalism.

  • Mark Thompson on 18/01/2013 10:08:48 AM

    Businesses have many reasons for providing a product at a loss. Some are just desperate for a quick fix with cash, some see it as a way to capture clients and then adjust the price later to return to profit. Some see it as a way to get rid of a smaller rival, or it can be a combination of all of these.

WP forum is the place for positive industry interaction and welcomes your professional and informed opinion.

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