ClearView Wealth in Australia is discontinuing the sale of Agreed Value income protection insurance contracts from 31 March 2020.
The insurer made the announcement in an ASX trading update, in which it states it has started a comprehensive review of its LifeSolutions IP product series with a focus on reviewing product pricing and design.
The company says this move stems from APRA’s recent policy measures and the continued under-performance of the IP Portfolio. It notes it welcomes APRA’s intervention, which included a stated expectation from the regulator that all life companies will cease offering Agreed Value IP business from 31 March 2020 (see: APRA Sets New Course…).
ClearView …will launch a new indemnity type IP product later this year
In addition to ceasing Agreed Value IP from the end of March, ClearView also stated it will launch a new indemnity type IP product later this year, which is intended to offer a lower maximum monthly benefit at a competitive premium rate.
The insurer noted it is highly likely that further price changes will be made in the coming months to reflect increased claim rates, and that the repricing of the product and a detailed review of its claims assumptions is also underway, leading it to state:
“Any further increases to the claims assumptions are intended to be recovered through premium rate increases…”
Some insurers appear to be engaging in ‘honeymoon’ discounting to maintain market share…
The insurer also took aim at new business discount offers, noting in its update that: “Some insurers appear to be engaging in ‘honeymoon’ discounting to maintain market share rather than focusing on delivering long-term sustainable products and transparent pricing to customers.”