Rice Warner consultant Raymond Chow said in a report released yesterday that insurance prices have risen dramatically over the past year.
“The core issue, well documented in the sector, is that prices for the death, TPD and Income Protection product segments have spiked, over the past year by 15 per cent, 26 per cent and 19 per cent respectively, on average, across the market,” Mr Chow said.
“These numbers mask a much larger underlying upward shift in prices.”
“In fact, over the past year, a handful of funds have more than doubled their insurance premium rates.”
In response, product providers have sought to adapt their product offerings, Mr Chow suggested.
“Rice Warner survey results suggest that the proportion of members in industry and public sector funds with default income protection cover has increased from 43 per cent to 52 per cent over the last year,” he said.
He also suggested funds are increasingly “changing the default death and TPD cover scale to a ‘life stages’ shape, or increasing the default number of units but changing (reducing) the sum insured per unit.”
Finally, he has observed a tightening of definitions and eligibility criteria, including the introduction of pre-existing condition exclusions for additional cover and life-events cover and TPD changes.
“This pricing pressure trend has sparked a revival of insurance product innovation, along with some redesign trends beginning to emerge,” he said.
