Each year, we review our premium rates to ensure our products remain sustainable and we can continue to pay claims.
Review of Income Protection Premiums
Australian life insurance companies are paying out record numbers of disability claims, including a more than doubling in claim benefits paid for mental illness between 2013 and 2018*.
We’ve experienced a continued increase in Income Protection claims consistent with the wider industry. One of the biggest factors is that claims are continuing longer than expected. This has a material impact on the overall claims cost. Several factors are driving this but particularly a rising proportion of mental health claims, which typically have a longer than average duration.
The low interest rate environment also means that lower future investment returns are anticipated on reserves, which are the premiums we put aside to pay for future claims. As a result, higher premiums are required to fund the same expected future claims.
*Source: FSC & KPMG 2020
Review of Crisis Recovery and Total and Permanent Disablement (TPD) Premiums
Crisis Recovery and TPD claims experience has also been deteriorating over recent years across the industry. Cancer remains the top cause of Crisis claims for both males and females, while mental health is the top cause of TPD claims for females and accidents and injury are the top cause for males.
These factors lead to a need to increase premiums to ensure sustainability so we can continue to be there for our customers when they need us.