Life companies in Australia have been warned that APRA and ASIC will monitor their progress in meeting regulatory, consumer and community expectations of pricing decisions this year.
Regulators will also monitor marketing and disclosure, as well as product design “…to deliver better consumer outcomes”.
A detailed letter to all life insurers across The Ditch outlines the findings from the regulators’ joint review of life companies’ practices in relation to premium increases, including subsequent corrective action taken by some life companies. It also makes clear ASIC and APRA’s regulatory expectations of life companies going forward.
The regulators’ expectations are that life companies:
- Have sound risk management and compliance assurance around re-rating practices and ensure any contract terms allowing for premium increases are transparent and not unfair
- Clearly explain how premiums are calculated and may change over the life of the policy
- Design and price life insurance products factoring in consumers’ need for premium stability
APRA and ASIC also say that as next steps, life companies should examine their contracts to ensure that the terms about how and when premiums may change are transparent and not unfair.
They say when making re-rate decisions, due consideration should be given to the consumer impact as part of the risk management framework.
The two bodies say that to do this effectively “…life companies themselves need to better understand the rate and drivers of future premium increases”.
Click here to view the full letter to life companies.