AFA News 18 March 2021. In 2019 APRA issued a warning to the Life Insurance industry to fix some key problems, including substantial losses being incurred in the Individual Disability Income Insurance market. Ultimately APRA chose to intervene in the market and put in place additional capital requirements linked to expectations of changes to product design, including the removal of agreed value cover, and the limitation of income replacement ratios and putting in place a five-year contract renewal requirement.
On Tuesday 9 March 2021, APRA issued a similar warning to superannuation funds and life insurers about the need to address issues in the Group Super life insurance market. This comes off the back of APRA releasing information in the previous week about market wide losses being experienced by both the Group Super Lump Sum products and the Group Super Disability Income Insurance products.
APRA has expressed concerns about premium variability, availability and provision of data and tender practices. We can expect to hear more about this as the Group Super market responds to the demands of APRA.
Issued 18.03.2021. AFA Policy & Education Update