APRA data confirms value of life/risk advice

APRA/life-insurance/DII/

20 April 2021
| By Mike |
image
image
expand image

The Australian Prudential Regulation Authority (APRA) has delivered new data confirming that life/risk advice delivers better outcomes in terms of successful claims.

APRA’s latest Life Insurance Claims and Disputes Statistics covering the 12 months to 31 December, 2020, concluded that, generally, “individual advised business shows higher admittance rates than individual non-advised for the same cover type”.

It said this could be due to the policyholder having clearer expectations up front of what is covered by the product, or that an adviser discouraging the policyholder from lodging a claim that is not covered by the policy.

It said the exception was Individual Advised Accident insurance which had an unusually low admittance rate.

The APRA analysis said that, in general, individual products had higher acquisition costs associated with the policy compared to group products.

“As this is reflected in the premium charged, the claims payments for these products will generally be of a lower percentage of the premium income.

It said disability income insurance (DII) business had the highest claims paid ratio for all distribution channels.

“While a ratio of over 100% suggests good value for policyholders, this is not sustainable and will threaten the ongoing availability of IDII for the Australia community in the future,” APRA said.

“With the release of the final sustainability measures and the introduction of the individual DII capital charge, APRA is working with the industry to move the product to a sustainable state and thereby deliver better outcomes for policyholders.”

Read more about:

AUTHOR

Recommended for you

sub-bgsidebar subscription

Never miss the latest news and developments in wealth management industry

MARKET INSIGHTS

So we are now underwriting criminal scams?...

2 months 3 weeks ago

Glad to see the back of you Steve. You made financial more expensive, not more affordable as you claim, and presided ...

2 months 3 weeks ago

Completely agree Peter. The definition of 'significant change is circumstances relevant to the scope of the advice' is s...

4 months 4 weeks ago

ASIC has suspended the Australian Financial Services Licence of a Melbourne-based financial advice firm....

1 week 4 days ago

The corporate regulator has issued infringement notices to three AFSLs whose financial advisers provided personal advice to a retail client while unregistered....

2 weeks 3 days ago

ASIC has released the results of its first adviser exam to be held in 2025, with 241 candidates attempting the test....

3 weeks 1 day ago

TOP PERFORMING FUNDS

ACS FIXED INT - AUSTRALIA/GLOBAL BOND