The pace of change in Australia’s income protection (IP) offering has gathered significant steam in recent years. For advisers who have been in the industry for a while now, you would have witnessed an increase in clients’ awareness of IP and its benefits against a backdrop of significantly more commentary about the industry’s sustainability.
Industry experts, like KPMG, have noted the profitability of the industry has been changing: “Retail disability income reported a loss of $368m (in 2017), making it a fourth consecutive year of losses.”[1]
This view of profitability is also being seen through changes at a pricing level. Rice Warner notes: “The industry has responded by ramping up premium rates by 30% or more”[2].
Both of these experts have acknowledged the importance of a sustainable IP market and, as an adviser, this industry context is important to know. The long term sustainability of the insurance industry is critical to the nation’s health.
Our clients aren’t oblivious to the changes occurring and it’s incumbent on both product providers and advisers to work through these changes with them and improve understanding.
This can happen by first, understanding the broader demographic, economic and social factors in which an IP product is developed and then second, understanding the specific dynamics of IP premium construction.
Over the past 10 or so years, we have seen some significant structural changes to the IP market and even more significant shifts in societal perceptions.
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