Wholesale insurance prices set to "firm": Rice Warner
Australians taking out insurance within their superannuation are set to see "more rational pricing" in the wholesale insurance market, says Rice Warner's Richard Weatherhead.
Weatherhead, who is head of life insurance at Rice Warner, pointed to a Rice Warner report that predicts a firming of premium prices in the wholesale market as insurers respond to more volatile and often higher claims rates.
"Median prices for death cover have reduced by 4.7 per cent over the past two years. In the context of the cost pressures facing insurers, such reductions, year after year, were never going to be sustainable and we are now seeing the emergence of more rational market pricing," said Weatherhead.
But the current $3.6 billion wholesale market was still set to grow at 6 per cent per annum in real terms over the next 15 years - although that is down on the 9.3 per cent per annum growth of the previous 15 years, he said.
"That [growth is] driven by a number of things, such as the fact that there is still an under-insurance issue. Even though the industry has done an incredible job of closing that under-insurance gap, it's still there," he said.
As for the volatility in claims, Weatherhead pointed to increased communication with fund members as one factor.
"We come from a starting position of relatively low engagement with members, so as soon as engagement starts taking place then members are aware of the cover they've got and there's some evidence of a linkage there," he said.
"Different workplaces and different communication channels with the insurer [also] appear to be leading to different outcomes in terms of claims," Weatherhead said.
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