Income Protection Premium Increases Set to Take Effect

Income Protection policy premium increases will commence in 2017 due to the higher than expected amount of claims being submitted and loss of revenue due to significant amounts of money lost on retail income protection over the last five years.

As a result of these higher than expected claims and loss of revenue, most life insurers have been steadily increasing their income protection rates.

The Australian Prudential Regulations Authority (APRA) was said to have observed many insurers increasing premiums in an attempt to improve profitability. APRA also identified that some companies failed to manage their ever increasing number of legacy products efficiently. These old legacy systems, with their outdated medical definitions, resulted in the products becoming more complex and costly, as well as not meeting the policyholders’ needs.

AIA, CommInsure and Clearview are some of the companies informing their customers of increasing premium rates. Specifically Income Protection (IP) policies and Business Expense (BE) policies.

AIA

AIA customers can expect an average increase of 4%, set to be applied for their next policy anniversary. The increase will vary depending on occupational class, waiting periods and benefit periods.

CommInsure

CommInsure is increasing their Income Protection premiums with 7.5%, which will take place on the anniversary of a client’s policy anniversary.

Clearview

Income Protection and Business Expenses policyholders can expect the following increases:

  • Waiting period rates for 14, 30, 365 and 720 days have increased by 10% to 15%.
  • Waiting period rates for 60 and 180 days have increased by 5% to 7.5%.
  • The discount on an Occupational Class AAA professional has increased with 2.5%.
  • AM Medical professional discount has decreased from 25% to 22.5%.

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Author: Russell Cain
Published: February 10, 2017

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2 Comments

  • Outraged |

    Hi, I have had income protection insurance with CommInsure since 2008 and have had gradual increases every year.

    I just received a letter saying that my premium will be increased by a massive 25% this 2018 year. The reason for this large increase given in the letter is simply that this is the result of their “most recent premium rate review”.

    Apart from downgrading aspects of my policy to get it cheaper or going through the hassle of obtaining the same insurance from another provider, is there anything I can do to complain or object to such a large and unexpected increase in my premium?

    • SPECIALIST
      Anneke |

      Hi,
      Your username is very applicable to your query, and we share your outrage.

      Firstly, I would check with your insurer to determine the entire reason for the increase:
      1. Was it due to your sum insured increasing?
      2. Did CPI increases contribute to the 25%?
      3. Are your policy premiums stepped or level style?

      Please take note that there has been a rise in the base rates of level premium income protection policies across the entire portfolio. The insurer has stated that the increases were necessary for the company to ensure it can continue to pay claims.

      To help you improve the affordability of your income protection premiums, you can:
      • Potentially remove the CPI increase if any are applicable to your policy.
      • Determine if you have any loadings on your policy and whether these can be reviewed and removed.
      • Pay your premiums annually, which provides a 5-8% discount.
      • Call CommInsure and ask what they can do.
      • Lodge a complaint, although you may not get far if it is a base rate increase across the entire portfolio.

      How to lodge a complaint
      You might want to start by lodging your complaint through CommInsure’s Internal Dispute Resolutions (IDR) process if your policy is held directly. They have 45 days to respond to your complaint.
      If taken through super, you can contact your super fund trustee and follow their IDR process. A super fund has 90 days to deal with any complaints.

      If you are unhappy with the outcome, you can take the matter to an external dispute resolution (EDR) scheme or in the case of a fund, to the Superannuation Complaints Tribunal (SCT).

      If you are still unhappy with the outcome, you may take your complaint to court. However, this will incur legal fees and may take a long time.

      In the meantime, speak to a specialist, who can take you through your income protection options. For example, perhaps restructuring your policies and changing your premium style will affect a positive change.

      When all else fails, it’s time to shop around and compare income protection quotes. Give us a call on 1300 135 205, and we can help you quikly switch insurers.

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