Australia's life insurance sector needs to shift its mindset to one of operating in a rational, sustainable manner if it is to regain investor confidence and, where appropriate, benefit from new capital, according to a number of life chiefs.
Listed life insurer TAL managing director Jim Minto said for the country's industry to be successful in difficult market cycles it must attract "new capital and act rationally".
"We've got to be around to pay claims in the years to come, we need investor confidence, we need investors to contribute new capital to this industry, so we must operate it in a sustainable way," Minto told last week's 2012 Financial Services Council conference on the Gold Coast.
"We've got a duty of priority to policyholders. We've got to be there to look after them."
Minto, who spoke as part of a panel session on the biggest challenges and opportunities facing the life industry, said he was not advocating the industry operate "anti-competitively".
He said the industry needed to change its thinking to more of a customer focus rather than a technical one.
"We must be very competitive, but for this industry to be successful it must attract new capital and act rationally and forget embedded values are the be all and end all, and we must attract the confidence of the investment markets and draw on additional capital," he said.
"So it requires us to manage and think about this from a different perspective."
In OnePath acting managing director Gavin Pearce's view, capital would go "wherever it thinks it will get return".
"So we need to have returns that are attractive enough for capital to come into our businesses," Pearce said.
He said a look at the present capital calculation would show there were a number of things that drove the top line and there was a similar list of things that drove the bottom line. One of them is the cost of distribution.
"We are holding a lot of money because of the cost of getting our product out there . but ultimately unless we can make that attractive, we fall down on what is our ultimate role in life, which is paying claims," he said.
"One of the things that we've interestingly found is that when we were ING [Australia] versus now being ANZ, people had more confidence that we were going to be there when they want to claim."
AIA Australia chief executive Peter Crewe said: "I think Australia is actually doing quite a good job in the context globally."
