Asteron commits to no premium increases
Asteron Life has committed to advisers that no premium increases will be applied to new business when the new clawback comes into effect on 1 July, 2016.
This promise was a direct response to adviser feedback, according to the life insurer.
However, the commitment excludes any increases due to age on stepped premiums, consumer price index (CPI), or any alterations to a policy which will continue as normal.
Asteron Life executive manager, Mark Vilo said as affordability can often be a key driver for lapses, the promise can give clients certainty without a concern of trying to manage a premium increase that is not anticipated.
"We know from our own statistics that around 5 per cent of policies lapse in the first year, 12.6 per cent in year two, and 12.3 per cent in year three. The top reason cited for lapses is price increases," Vilo said.
"In simplistic terms, if you had 100 policies in force today, at the end of year five, you would only have around 56 policies left. That's a sustainability challenge we have to work hard to improve.
"The long-term goal for our business is to continue to work to support independent financial advisers, help improve efficiency, and provide relevant products and make changes that ensure a positive outcome for advisers and customers."
Recommended for you
The Federal Court has dismissed a conflicted remuneration case brought by ASIC against the director of life insurance distributor Freedom Group, where Bali holidays and Vespa purchases were among sales incentives.
Policy and advocacy specialist Benjamin Marshan has left the Council of Australian Life Insurers after less than a year, having joined in March from the Financial Planning Association of Australia.
The declining volume of risk advisers meant KPMG has found a rising lapse rate for insurance policies arranged by independent financial advisers, particularly in the TPD and death cover space.
The Life Insurance Code of Practice has transferred from the Financial Services Council to the Council of Australian Life Insurers.
