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Mar 2019

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Australia: Income protection business continues losing streak

Source: Asia Insurance Review | Dec 2016

Income protection policies that safeguard consumers in the case of injury or ill health have been a loss-making business for three years in a row because of rising claims and lapse rates.
 
   Insurers lost A$341 million (US$257 million) from individual and group income protection policies in the year to 30 September, after losing A$524 million the year before, reported the Australian Financial Review citing figures published by APRA.
 
   The insurance sector blames the losses on a steep rise in stress and mental health-related claims.
 
   “New policies are not priced high enough,” said Mr Jim Minto, a director of Dai-ichi Life Asia Pacific. “The problem has been going on for three years and the industry has not been able to fix it.”
 
   The performance also reflected the difficulty in generating investment returns in a low-interest rate environment, as well as the problems in the income protection divisions.
 
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