The Australian Prudential Regulation Authority (APRA) has continued expressing concern about poor disability income insurance (DII), writing in its Insight publication released last week that the performance and sustainability of DII products were under threat.
The piece said that, notwithstanding DII’s somewhat improved performance since 2015, the Authority remained worried about the commercial sustainability of the product in its current form.
In phase one of a thematic review into the issue, which focused on APRA-regulated life insurers, APRA found that DII insurers faced:
APRA said that these issues needed to be addressed to create a sustainable product that benefits policyholders, insurers and reinsurers, and market stability. Such a product would avoid market disruption by minimising significant pricing increases or reductions in cover by insurers.
The Authority said that there was a high level of awareness within the industry of the issues facing DII products.
“APRA expects the whole industry to continue addressing the challenges facing individual DII and put this product on a strong and sustainable footing after a prolonged period of underperformance,” the article said.
Phase two of the review, which would look at the primary writers driving the positive changes needed to mitigate the risk of deterioration of DII performance and enhancing sustainability, would occur in the second half of this year.
The insurance company has joined this year’s awards as a principal partner.
The $135 billion fund has transitioned away from TAL Life Insurance following an “extensive tender process”.
The $80 billion fund is facing legal action over allegedly signing up new members to income protection insurance by default without active member consent.
In a Senate submission, the Financial Services Council has once again called for further clarification that the government will assess the consumer outcomes of group insurance against the enshrined objective of superannuation.