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 These old legacy systems, with their outdated medical definitions, resulted in the products becoming more complex and costly, as well as not meeting the policyholders’ needs.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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