Insurance price hike
Mergers and acquisitions, an increase in claims and more generous definitions of Total and Permanent Disability (TPD) have reduced the number of group life products on offer and increased the price of premiums.
Mergers and acquisitions, an increase in claims and more generous definitions of Total and Permanent Disability (TPD) have reduced the number of group life products on offer and increased the price of premiums.
The Group Life & Salary Continuance Analysis Report released by Rice Kachor Research reveals that while there were 20 group life products on offer in 1996, merger and acquisition activity in the market has reduced the number to 12. The number of salary continuance products fell from 15 in 1997 to 12.
And after years of lower premiums, the cost of group life premiums has risen. The average gross premium (before profit share) increased from $127,054 to $132,636. The average net premium increased from $108,737 to $120,502.
Rice Kachor reports that super funds, who are the major purchasers of the products, have been putting pressure on insurers to relax the definition of TPD resulting in some claims being paid even where the member’s circumstances do not meet the definition contained in the fund.
This trend, coupled with the higher level of claims amongst the blue collar occupations have affected both TPD pricing and availability.
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