Clients hang on to old IDII products
Life insurance clients are retaining their existing disability income policies at a higher rate than has been over the last 10 years, according to DEXX&R.
Data from DEXX&R found the attrition rate for disability income decreased for the eighth consecutive year, down from the June 2013 high of 16.1% to 8.6% in June 2021.
Disability income attrition rate
Source: DEXX&R Life Analysis Report
It noted disability income new business fell to a 10-year low at a decrease of 8% to $382 million over the year to June 2021, down from $415 million in the 12 months to June 2020.
“This is the lowest level of new business recorded since 2011 – a 10 year low. This fall is attributed to the impact of the COVID lockdown and disruption in advice channels and the Australian prudential Regulation Authority [APRA] mandated product intervention effective from the end of March 2020,” DEXX&R said.
“One of the top five companies recorded an increase in disability income new business over the 12 months to March 2021. AIA recorded an increase of 7.7% to $58 million in disability new business.”
From 1 October, 2021, all insurers were required to launch new disability income products in line with APRA’s new requirements.
Disability new business at FY end
Source: DEXX&R Life Analysis Report
The data also found while the Protecting Your Super measures led to fewer superannuation members with default cover, the re-pricing of existing benefits had enabled life companies to increase total premiums received.
Total in-force group risk premium increased by 10.9% from $6.1 billion at June 2020 to $6.8 billion over the 12 months to June 2021.
During the same period three of the top five companies in the group market recorded an increase in in-force group premiums. AIA’s In-force business increased by 46.9% to $1.4 billion, TAL In-force business increased by 7% to $2.4 billion and QInsure 6.2% to $732 million.
As at June 2021 TAL/Asteron had the largest market share at 27% ($4.43 billion), followed by AIA/CommInsure, Zurich/OnePath, MLC Life, and AMP.
Top five life insurance groups in Australia
Source: DEXX&R
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