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Group insurance premiums under pressure
The insurance industry has warned of increased premiums for group insurance after the number of claims jumped in the last two years.
CommInsure's wholesale life insurance general manager Claire Roberts said that as funds tried to address the under-insurance problem through raising automatic acceptance limits (AALs) and actively engaging members about insurance, the number of claims was increasing.
The number of people who had never claimed had shrunk, she said, which was one of the trends related to higher claims, she said.
The industry had been proactive about educating the community, Roberts said, but people may have been more apathetic about insurance when default levels were lower.
Although premiums would increase as claims increased, members were receiving better cover and better access to insurance - and so it was a good move, according to Roberts.
But trustees and directors should be mindful of the intent of insurance and also the risk of anti-selection sneaking through with higher AALs, she said.
"If you have very high AALs, trustees just really need to turn their mind to the fact that it's the intent of insurance to provide protection for a group of people. It wasn't intended to give access to high levels of insurance to a few without under-writing," she said.
Although corporate funds generally had higher AALs, Roberts said all super funds were different and needed to assess a number of different trends and how they all came together, and the impact on the price of claims.
She said economic pressures could also have played a role in rising claims, and TAL managing director Jim Minto agrees.
He said TAL expected to see insurers increase premiums over the next two years after an increase in claims for death and disability.
He said evidence showed insurers and reinsurers had suffered considerable losses, and although it was good to see members getting good value out of their life insurance protection, it needed to be appropriately structured.
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