APRA disappointed with life companies price -squeezing consumers out of legacy products
APRA has expressed disappointment in life insurance companies after poor solutions were submitted to solve problematic legacy practices regarding individual disability income insurance.
While APRA acknowledged the challenges associated with implementing the changes to income protection insurance policy terms they requested, but saw this as a missed opportunity that could have improved both the sustainability of this type of insurance and effective customer management.
The regulator remained convinced that there are more effective ways of addressing the risk of unsustainable product terms other than price-squeezing consumers out of unsustainable legacy products.
APRA suggested life insurance companies start collecting information on policy holder’s circumstances, such as dangerous past times and occupational and financial circumstances, to more effectively understand and manage risk.
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