The Actuaries Institute has called for urgent reform of Australia’s $5 billion disability income insurance (DII) sector, noting that failure to implement significant changes will reduce consumer access to affordable disability cover in the future.
The Institute has established a taskforce to identify where critical reform is needed. It commissioned KPMG to compile a comparative research report Disability Income, An International Comparison, to help start the debate about changes needed to bring about a sustainable long-term solution that supports consumers.
“This is a valuable contribution that will help the profession identify and tackle some of the issues that are impacting the DII market,” said Actuaries Institute chief executive Elayne Grace.
The report found the sector needs simpler products, a reduction of ‘bells and whistles’, a change to definitions, and a review of the benefits to encourage those who can, to return to better health as soon as possible.
“Modern life insurance provides valuable financial benefits for people who can’t earn an income due to injury or sickness,” said Ian Laughlin, convenor of the Actuaries Institute’s Disability Insurance Taskforce. “Australia has a very competitive market and customers have been offered a smorgasbord of product features. However, they have also been subjected to multiple unanticipated premium increases.
“A decline in insurance company profitability despite these steep premium hikes has called into question the sustainability of disability income insurance in its current form, and suggests the potential for market failure,” Mr Laughlin said. ”That raises real concerns for consumers, and the broader community, about future access to affordable DII cover.”
For more information, visit www.actuaries.asn.au