APRA's changes to the income protection market

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In December 2019, the Australian Prudential Regulation Authority (APRA) announced a number of measures to address the ongoing losses in individual Income Protection (IP) insurance.  These changes seek to address issues in both product design and pricing practices that have contributed to the current unsustainable industry position

 

We are supportive of APRA’s measures that will help to sustain the ongoing availablity of IP products in the future. It is crucial that we get the design of our products and the operation of our business right for you and your clients, and equally important that we live up to and exceed community expectations to ensure life insurance can continue to play its important role in safeguarding the wellbeing of our community.

 

Further changes are required by 1 July 2021, so we’ll keep you informed as more information becomes available. In the meantime if you’d like to find out more please read our FAQs or visit APRA’s website. 

 

 

Removal of Agreed Value IP contracts

By 1 April 2020, APRA requires all insurers to cease the sale of Agreed Value Income Protection policies.

 

We will be releasing an update to Accelerated Protection towards the end of March 2020, however in the meantime to assist you in the lead up to the deadline, we’ve put together a summary of the important things you need to know, particularly when it comes to any quotes or applications currently in progress:

 

 

KEY DATES – NEW BUSINESS
Electronic applications via TAC Applications must be received by 26 March 2020
Tele-Interview requests submitted via TAC Must be received by TAL by 26 March 2020, with interview undertaken by 30 April 2020
Paper applications with a quote signed prior to 26 March 2020 Must be received by TAL by 30 April 2020
Finalise outstanding requirements (all types) Policy with Agreed Value benefit must be issued by TAL by 30 June 2020

 

If your client wishes to apply for Agreed Value Income Protection, we encourage applications to be submitted as early as possible to allow for processing within these timeframes.

 

Existing Agreed Value IP policies will remain unchanged

TAL and Asteron customers with existing Agreed Value IP policies can continue to maintain and amend their cover in accordance with existing policy terms – these policies are not subject to any new restrictions as a result of APRA’s measures. This means that the availability of CPI increases, policy alterations, change of ownership, reinstatement options and underwritten increases will remain unchanged in line with existing product terms and processes. However, the addition of new Agreed Value IP policies or conversion of existing policies from Indemnity to Agreed Value will no longer be possible.

 

For general information on policy amendments, please see the relevant TAL and Asteron Adviser Guides.

 

Further Information

For further information, please read our FAQ, contact your local TAL Sales team member or our Adviser Service Centre on 1300 286 937.

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