Sustainability measures ‘will impact disability income new business’
21 February 2022
It forecasts in-force premiums will rise an average 1.6% annually to $3.3 billion by June 2031.
Dexx&r says in the last ten years to June 2021 disability income in-force premiums increased 5.2% per annum to $2.8 billion.
“Disability income product changes will have negative impact on new business,” Dexx&r said. “It is expected that the average premium per policy for new business will be lower than for pre-October 2021 policies.”
The research house says since October life insurers have closed their existing range of disability income products to new business and released revised offerings that are broadly consistent with the Actuaries Institute’s “Reference Product” proposal.
It says the current offerings in the market are designed to reduce the incidence and duration of disability income claims by tightening definitions, reducing the amount of income that can be insured, and deducting business and passive income from the monthly insured benefit when on claim.
“Taking all the factors into account we have significantly reduced projected new premiums over the next ten years,” Dexx&r said.
“Mitigating this reduction is an expected improvement in the attrition rate and premium growth from alterations to existing in-force business.”
The sustainability measures imposed by the Australian Prudential Regulation Authority are aimed at turning around the market, which has lost billions in the last few years.