Australia:Life insurers pricing themselves out of consumers' range

Life insurers need to harness innovation and develop more affordable and sustainable products if they are to avoid dealing with market disruptors, according to the Australian Financial Complaints Authority.

Speaking on a panel at the Financial Services Council’s Life Insurance Summit recently, AFCA lead ombudsman for insurance John Price said that consumers are increasingly seeing (non-group) insurance products as unsuitable and unaffordable, according to a report by Professional Planner.

The sustainability of the insurance industry is under threat, he explained, because consumers are being priced out of insurance and opting to let their policy lapse.

“From a consumer point of view the industry is rapidly pricing itself out of consumers’ range,” Mr Price said. “Other than group insurance, we’re seeing complaints coming in, unfortunately, from people who didn’t opt in that otherwise would have been covered.”

While the insurance industry has been busy reshaping its offerings to combat losses of around A$5bn ($3.9bn) over a five-year period, as well as catering to new sustainability standards around income protection insurance, Mr Price believes providers may have lost sight of the consumer.

“It’s not just the industry focussing on what’s sustainable to make a profit, but working with consumers to ensure that the products being provided are consumer-suitable in terms of not only benefits but also the price, and that that’s sustainable from an industry point of view,” he said.

Source: Asia Insurance Review