Life Insurance Premiums Will be Dearer

Life Insurance premiums are set to cost much more in time to come, is what TAL MD Jim Pinto foresees due to increase in claims. Australian Prudential Regulation Authority (APRA) life insurance statistics showed a loss to the tune of $ 29 million in the Australian wholesale life insurance industry till September 2012. Minto said “Fund members are starting to see premium increases for the first time in a number of years. We expect that many funds will increase their prices over the next two years, as insurers respond to heavier numbers and values of claims being reported across all types of benefits including death and disability.”

He added “There is plenty of evidence of insurers and reinsurers suffering considerable losses from this and it is a reality that wholesale insurance prices were simply too low in the past. Some of these claims are driven by the tighter economic environment. It is marvelous to see Australians gaining great value from their life insurance protection but it does need to be appropriately structured and priced.”

He also expressed concern that “Pricing was more sustainable pre-GFC but in recent years the industry has experienced a significant increase especially in disability-related income protection claims, often stress related.”

He summed up the issue stating that life insurance and superannuation industries would have to jointly search for methods of stable pricing in the long term

Source-Medindia