AFA News 10 March 2022. On 16 February 2022, APRA appeared in front of a Senate Estimates hearing and were asked a range of questions on Life Insurance matters and the Sole Purpose Test by Queensland Nationals Senator Susan McDonald and WA Liberal Senator Ben Small.
The specific questions addressed the following:
- The decline in life insurance new business over recent years.
- Upfront premium discounting practices.
- The extent of premium increases in the IDII market.
- The status of APRA’s review of the Sole Purpose Test guidance.
- The potential for negative client impacts from the five-year contract refresh requirement as part of the final stage of APRA’s Intervention into the IDII market.
Some of the key messages to emerge from this session were that APRA expects the life insurers to develop a plan for the transfer of clients from the legacy IDII products to the new IDII products (although noting that this is ultimately up to clients) and that they are considering whether or not to proceed with Tranche 3 of the APRA Intervention into the IDII Market.
The AFA has concerns about Tranche 3, which would involve policies being updated to the current terms and conditions every five years, and clients being subject to underwriting again for financials, occupation and pastimes. We have recently raised our concerns with APRA, including the potential implications for people who are not gainfully employed at the time of the five-year contract refresh.
Please click here for a copy of the Hansard transcript of the coverage of these questions by Senators McDonald and Small, which start at the bottom of page 104 and continues to the bottom of page 107.
Please click here to see a video of the questions asked by Senator McDonald.
Please click here to see a video of the questions asked by Senator Small.
For any questions, please email email@example.com
Issued 10.03.2022. AFA Policy & Education Update