Describing the advised life insurance sector in Australia as being in a state of crisis, industry body the FAAA is seeking more meaningful reporting into the sustainability of the industry.
In its submission to supervisory body APRA’s consultation on Life Insurance Data Transformation, the FAAA focussed its submission on the challenges faced by the life insurance industry over recent years saying “…it’s essential that APRA’s data collection focus on some of the key factors that provide an insight into the sustainability of the life insurance industry and the trends in the marketplace”.
The FAAA has identified a range of factors that it believes needs to be closely monitored including:
- New business volumes
- Discounting practices
- Premium increases
- Average policyholder age
- Discontinuances
- Underwriting
- Leakage of benefit payments
The FAAA states that in short “…it is easy to conclude that the advised life insurance sector is in crisis.”
However, it says this is only part of the story “…as the flow on consequences for life insurance are equally important, with fewer new entrants into the life insurance pools and particularly in terms of younger lives.
“This will undoubtedly over time push up the average age of insured Australians, which will fundamentally change the economics of the life insurance business model”.