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NewsSuper Funds forced to raise life insurance premiums

Super Funds forced to raise life insurance premiums

Screen Shot 2014-04-10 at 10.01.28 AMThe days of getting very cheap group-discounted Life Insurance through your super fund are looking numbered, as funds raise premiums and regulators warn they are repeating the mistakes of the past.

Senior insurance regulator  Ian Laughlin, who is deputy chairman of the Australian Prudential Regulation Authority, warned this week that this sector of life insurance has been losing money and was not yet out of the woods.

“Group business profit margins have been on a steady downward trend and have been negative for a while,” he told the Financial Services Council Life Insurance Conference in Sydney last week. “There have been problems with pricing and reserving.”

An increase in claims and changing social attitudes have created the industry’s problems, he said.

“Consumers are aware of the benefits offered by [group] life insurance and that is affecting claims,” he said. “We are also seeing some members of the legal profession now driving claims… more insurers are finding claims are lodged with the help of a lawyer.”

“Some of the problems we are facing now have occurred before in the industry,” he said, wishing there were more “old, wise heads” advising life insurance companies these days.

Premiums have started to rise in response to the issues the industry is facing.

As this story reported recently, the nation’s biggest industry super fund has raised its life insurance premiums by an average of 35% because of increased claims.

Income protection premiums also rose by up to 75% for AustralianSuper’s 1 million-plus members.

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