Disability income insurance (DII) new business fell to a 10 year low thanks to COVID-19 lockdown impacts and the prudential regulator’s production intervention mandate, according to DEXX&R.
The research house’s latest life insurance report found DII new business decreased by 2.2% to $386 million over the year to 30 September, 2021, down from $395 million for the year prior. It said this was the lowest level of new business recorded since 2011.
“This fall is attributed to the impact of the COVID-19 lockdown and disruption in advice channels and the APRA mandated product intervention effective from the end of March 2020,” DEXX&R said.
“Three of the top five companies recorded an increase in disability income new business over the 12 months to September 2021. MLC recorded an increase of 39.5% to $82 million, TAL recorded an increase of 1.1% to $66 million and AIA recorded an increase of 13% to $62 million.”
DEX&R also found the rate attrition rate for DII business decreased for the eighth consecutive year to 8.6% in September 2021. This, it said, indicated clients were retaining existing DII policies at a higher rate than other the past 10 years.
Individual lump sum risk new business was down 0.8% to $216 million during the September 2021 quarter and lump sum new business sales were down 4.2% to $927 million, the further straight yearly decline for lump sum new business.
“The continued decrease in business reflects the impact of COVID-19 lockdowns and disruption in the advice distribution channel including the restructuring and transfer of ownership of retail bank owned dealer groups and a fall in the number of life risk advisers,” the report said.