Insurance costs will increase over the next two years, with more claims putting pressure on prices, according to TAL.
The life insurance company have said the industry has seen a significant increase in disability-related income protection claims, which has created an upward pressure on insurance prices.
"We expect 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," TAL managing director Jim Minto said.
"Pricing was more sustainable pre-global financial crisis, but in recent years the industry has experienced a significant increase, especially in disability-related income protection claims - often stress related."
Statistics from the Australian Prudential Regulation Authority have found that the Australian wholesale life insurance industry experienced a $29 million loss for the quarter ending September 2012.
Research from Rice Warner has also found the median prices for death cover have reduced by 4.7 per cent over the past two years.
"In the context of the cost pressures facing insurers, such reductions, year after year, were never going to be sustainable - and we are now seeing the emergence of more rational market pricing," Rice Warner head of life insurance Richard Weatherhead said.
With the insurance industry adjusting to more volatile markets and higher claim rates, Rice Warner has predicted the wholesale insurance market will grow at a rate of six per cent per annum over the next 15 years, in contrast to the 9.3 per cent growth per annum seen over the past 15 years.
TAL said that these premium increases were a response to market changes and the need for a properly structured insurance pricing system.
"There is plenty of evidence of insurers and re-insurers suffering considerable loss from this, and it is a reality that wholesale insurance prices were simply too low in the past," Mr Minto said.
