Lapse rates plaguing AMP’s life insurance business will likely get worse before they get better, the company’s CEO has said.
Commenting on AMP’s annual results, which saw net profit fall 11 per cent to $672 million in the year to 31 December 2013, CEO Craig Meller said a plan was in operation to combat the life insurance issues that have hit its bottom line.
However, on the lapse front, there could be some short-term pain as the company institutes its longer-term reforms, which AMP hopes will deliver improvement in 2015, he said.
“We don’t expect these changes to deliver a quick turnaround in wealth protection and there’s no doubt that from here recovery is likely to be bumpy, with volatility that is characteristic of the industry,” Meller told a briefing yesterday.
“We’ve been encouraged by some very early signs of progress, but we still have a long way to go.”
Measures to improve lapse include “putting prices up or taking action against planners whose business characteristics (AMP) finds unattractive,” Meller said.
AMP’s wealth protection business recorded a significant decline last year, dropping from $190 million in 2012 to $64 million in 2013, according to a statement on the Australian Securities Exchange (ASX).
Meller said he broadly expected claim levels to remain the same in 2014.
