Initiated in late 2022, the review was prompted by concerns that repeated premium increases may not have been applied in accordance with policy terms and may not have met reasonable policyholder expectations. The findings indicate that while life insurers have made progress in improving re-rating practices, marketing and disclosure materials, and product governance, it is still too early to fully assess the effectiveness of these actions in reducing the frequency and size of premium increases.
As of December 2024, Australians were paying approximately $9.4 billion annually for individual life insurance cover obtained through financial advisers. Over the five years leading up to December 2024, the average annual premium to maintain insurance cover increased significantly due to factors such as cover indexation, age-based increases, and increases in base premium rates.
To address these issues, APRA and ASIC have outlined expectations for life insurers, including reviewing past premium increases, enhancing disclosure and marketing materials, and considering improvements in product design. The regulators have also engaged with the Council of Australian Life Insurers (CALI) to implement industry-wide measures aimed at better managing consumer expectations around premium increases, including clearer and more accurate insurance premium labels.
Both regulators will continue engaging with individual life companies where further improvements are needed, emphasizing the importance of aligning premium practices with policyholder expectations to maintain trust and ensure the sustainability of the life insurance sector.
Please Note: If this information affects you or is relevant to your circumstances, seek advice from a licensed professional.
