AFA News 21 October 2021. On 19 October 2021, APRA released the latest version of their report on life insurance claims for the 12 months to 30 June 2021. This report typically generates a lot of media coverage and is used as a vehicle to compare the channels and the value delivered through each of these channels.
This report includes a great deal of data on life insurance claims, including the percentage of claims that are paid for each channel and product within the channel and the claims paid ratio for each product and channel. The following table demonstrates that the individual advised channel generates materially better results than the individual non-advised channel and broadly consistent outcomes to Group Super in the Death and Disability Income Insurance markets. There are many reasons for these differences, which is worthy of a separate analysis.
| Individual
Advised |
Individual
Non-Advised |
Group Super | |
| Cover type | % admitted | % admitted | % admitted |
| Death | 97% | 92% | 98% |
| TPD | 82% | 64% | 89% |
| Trauma | 87% | 85% | * |
| DII | 95% | 89% | 95% |
In terms of the claims paid ratios, there are a few important outcomes that emerge, being that individual advised death cover remains strongly profitable, and the profitability of the IDII product is clearly improving after a number of years of significant premium increases. What is also evident is that the profitability of Group Super TPD and DII looks to be very much struggling, as is individual non-advised disability income insurance where the claims paid ratios are either very close to 100% or above 100%. In the case of Group Disability Income Insurance, this suggests that 111% of premiums are being paid out in claims, and this is before they account for the costs of administration.
| Cover type | Individual
Advised |
Individual
Non-Advised |
Group Super |
| Death | 42% | 33% | 72% |
| TPD | 51% | 46% | 97% |
| Trauma | 53% | 34% | 0% |
| DII | 57% | 107% | 111% |
Please click here to access this report.
For any questions on this report, please email policy@afa.asn.au.
Issued 21.10.2021. AFA Policy & Education Update
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