New business for disability income insurance (DII) has grown 2.5% after reaching a 10-year low last year.
In DEXX&R research, the firm said disability income new business increased by 2.5% to $409 million over the year to March 2022. This followed a 10-year low of $399 million in the year to March 2021 and reversed four years of declining new business.
Three of the top five companies - MLC, TAL and AIA - recorded an increase in disability income new business over the 12 months.
MLC had the largest increase at 45.7% while TAL increased 14.5% and AIA increased 0.8%.
Looking at quarterly figures, new business in the March 2022 quarter was $96 million, 1.1% lower than the previous quarter and 0.4% lower than the figure in March 2021.
This was attributed to mandated product intervention by the Australian Prudential Regulation Authority (APRA) which offered more restrictive terms and conditions on disability income products sold from October 2021.
The attrition rate for disability income business increased for the first time in nine years, up from 8.7% in March 2021 to 9% in March 2022.
“Discontinuances remain at historically low levels indicating that clients are retaining their existing Disability Income policies at a higher rate than has been the case over the past 10 years. This trend is expected to continue as the terms and conditions offered by existing products are significantly more favourable than those offered by current onsale products,” DEXX&R said.
Comments
The trend for retaining existing IP policies will only continue until those who have a large portion of the market continue to "shaft" their existing loyal client base. They will justify pricing themselves out of the market by increasing their premiums up to 50.0% every 3 years or less.
It will be difficult for any adviser to promote the new inferior IP products with inferior policy benefits to replace the existing ones and still think this stays within the boundaries of "clients best interest"
If any adviser worth his salt believes the life companies have any morality, then please examine the motivation for the demise of the life insurance industry and the lack of competition that now exists.
We spend most of each week getting reduced quotes for existing policies much more than new business applications
The existing business is declining and if not for many advisers like us that understand the value of the previous contracts and try and keep them at an affordable level without losing valuable base level benefits the lapse rate would be dramatic. Show us how many clients or what percentage across the industry have reduced their benefits to just stay with what is a far better contract ? I fear though this is only going to be a temporary measure as constant increases will either drive the client to an inferior cover or let their policies lapse and take the chance
There has been no benefit to anyone here accept the life companies and their ongoing greed
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