APRA data confirms value of life/risk advice

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.

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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.”

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Assuming this information is correct (which I believe it is), then someone at APRA should call up Jane Hume & advise her to remove the 8 Unit requirement (by Dec 2025). Otherwise there will only be a handful of life agents left after Jan 2026 to write any business. If you think the collapse in new business is bad now, you've seen nothing yet. This Fed Govt is inept.

Steve, You're right on the money there. It is against all logic that they are making pure risk advisers do this ridiculous FULL FP degree anyway. Like having all GPs forced to do FULL brain surgery qualifications and a few more specialist disciplines thrown in for luck. GPs (regular doctors) would be leaving the industry on a wholesale basis and people would be screaming. A dedicated risk degree would be much more appropriate as this full 8 unit disaster is completely inappropriate to riskies. This is what happens when politicians and assorted 'public servants' without adequate qualifications are put in charge of things this important. God forbid they should ever be in charge of running the country(!) . . . oh, wait . . .

Please send the memo to Jane Hume, ASIC, Labor, Consumer Groups and every other person that criticises this industry.

You are wasting your time to call Jane Hume about anything to do with Superannuation and particularly insurance and even more particularly if you are disputing your outcome on Insurance. Remember me, Jane Hume, when REST gave away $210k of my deceases son's Super and Death Benefit because he thought that was "fair"???. You weren't interested and didn't even bother to reply to me. Twice. I would never have insurance inside Superannuation now with an Industry Fund. Never any followup. No advice even tho you get charged for it every month. Retail fund Colonial First State just sent advice to my other son. Maybe Jane Hume and Justice Hayne should note this and have another RC just into Industry Funds. Or are they too close to see?

Thanks APRA. You may not realise this but we are all leaving the industry.

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