The Australian Securities and Investments Commission (ASIC) and the Australian Prudential Regulation Authority (APRA) have released an update on the progress life companies (life insurers and friendly societies) have made in addressing issues related to premium increases, product design, and disclosure and marketing materials.
The regulators first notified life companies in December 2022 and again in December 2023 amid growing concerns that frequent, large and unexpected premium increases may not have been applied in accordance with policy terms and may not have met reasonable policyholder expectations.
This latest review of industry progress identified improvements in re-rating practices, marketing and disclosure materials, as well as product governance. However, actions to address increasing premium volatility through product design are still at an early stage. Given the recency of these actions, it is too early to fully assess their effectiveness in reducing the frequency and size of premium increases. Both regulators will continue to engage with the individual life companies where the need for further uplift has been identified.
Australians rely on life insurance to protect themselves against adverse events. Life companies need to ensure their products meet consumers' needs, offer reasonable premium stability over the lifetime of the policy and continuously manage the expectations of consumers around premium increases.
