Under pressure OnePath increases IP and TPD premiums for existing customers
Major insurer OnePath has told advisers it will be increasing base premiums to existing customers as it takes its efforts to staunch its losses on income protection a step further.
Having earlier this year ceased agreed value and level premium IP cover and increased premiums for new customers, the insurer has gone a step further by foreshadowing a 25% increase in base premiums (both stepped and level) for existing customers.
It has also announced a 12.5% increase in premiums for new and existing customers with respect to Total and Disability cover.
It told advisers that for existing customers it would be communicating the changes as part of their renewal from 22 September, with the first policy anniversary for the renewals arriving on 3 November, while for new TPD customers, the changes would take effect from 19 September.
In announcing the moves, OnePath said that it was feeling the severity of current challenges and did “not expect them to subside any time soon”.
It nominated those challenges as being that:
- Life insurers (including OnePath Life) have lost almost $3.5 billion on income protection insurance in the last five years;
- We’re seeing higher than expected claims rates and durations, with a significant growth in claims costs across income protection and TPD;
- Unemployment, social isolation and financial hardship are expected to contribute further to an increase in the number of people suffering mental health issues, and the length of time they suffer from them; and
- We are experiencing interest rates that remain as close to zero as they ever have been in this country’s history, with an uncertain economic outlook.
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