APRA concerned about direct life sales
The Australian Prudential Regulation Authority (APRA) has used its annual report to express concern around directly-marketed life insurance, saying many concepts are unproven and the market is becoming crowded.
The regulator's annual report, released on Friday, points to the fact that the direct marketing of life insurance has blossomed with the emergence of new distribution channels.
"These involve marketing of life insurance products directly to the public through call centres, the internet and television advertising, often at high prices," it said.
The report said APRA's focus had been on the governance associated with this type of business, the risks such products might pose to the reputation and viability of insurers and "whether these risks are being appropriately managed".
"Many of the concepts in this area are unproven and the market is becoming crowded, which will put pressure on profitability," the annual report said.
The regulator said that it had been in discussions with the Australian Securities and Investments Commission (ASIC) over directly marketed business to ensure consistent understanding and coordination of scrutiny in the area.
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