DII new business at 10-year low

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.

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DII is in a death spiral and it's nothing to do with COVID. The older products are unaffordable to retain, and the new products are not worth buying.

The risk insurance industry has been decimated.
The relationships and respect that once existed between quality advisers and insurers has all but completely died.
LIF was a manipulated spectacular failure and the insurers put shareholder profits before supporting their loyal, quality risk specialists who previously provided them with large inflows of quality risk business.
Of course, significantly greater new business inflows assists in offsetting the claims outflows but the insurers thought they could go direct and cut the adviser out of the picture.
Well, regardless of the persistent requests from advisers during LIF negotiations to listen to the logic regarding quality business and the impact on product pricing, no one listened…especially the toxic Liberal Govt who have have done everything they possibly can to eliminate independent and self employed advisers.
It has been a catastrophic mistake and the Australian public and quality advisers are the victims of manipulated and negligent legislation and corporate behaviour.
It has been an utter disgrace.

How about that LIF hey!! Working wonders.

What a complete failure of policy from the government.

Yeah no this has nothing to do with the COVID-19.

The writing has been on the wall for years. You could see it coming from a mile away.

Even while many people were saying that you could no longer do risk insurance, I had felt that we would absorb some pain but manage somehow, but alas, I have finally realised that I was wrong. We have almost stopped writing risk completely.

People will still enquire of course, but we are usually unable to do the work as it requires a lot of work with no reward.
We are in the process of changing the way we do business so that hopefully we can stay afloat and I am starting to consider a career change.

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