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Information for advisers
Following a recent review of Resolution Life’s Australian retail product proposition, we’re making changes to the pricing of some of our products.
- Premium rate increases will apply from 17 January 2022 to some Income Protection, Death and TPD products. There are no changes to any of our Trauma products.
- The changes also include slight reductions in some large sum insured discount rates.*
- We will begin informing affected customers of the increases in their annual policy renewal notices over the 12 months from 1 December 2021 onwards.
The adviser FAQs below explain these changes in detail. Please contact us or your Business Partnership Manager if you’d like further information on these changes.
*Also referred to as large case discounts and large insured amount discounts.
Support for your customers
The new premium rates apply for policy anniversaries on and after 17 January 2022. The required notice period means we’ll begin notifying customers of the new rates via a significant event notice (SEN) in their annual policy renewal notices from 1 December 2021 onwards.
We appreciate that some of your customers may have questions and concerns about the impact of the new premium rates. We have therefore created an educational flyer for you to download and provide to any of your customers as needed. It explains:
- Why we and many other insurers are having to review our pricing and the external factors that influence premium rates
- How these changes are in addition to other reasons their premium might have risen, such as annual CPI or age-based increases
- Why level premiums are also affected by some of the rate increases
- How customers remain in control of their cover and should consult with their adviser to understand their options and ways of potentially reducing the cost of their cover.
You can download a PDF version of the flyer here
Our website also has information for customers about premium affordability.
Frequently asked questions (FAQs)
Below are some questions advisers may have about the re-pricing and its impact.
What are the changes?
Rather than adopt a blanket approach right across our product suite, many of the premium rate changes are targeted to certain products and benefit types where we, like many other insurers, are experiencing significant increases in the cost and duration of claims.
Premium rate increases will apply from 17 January 2022 to some Income Protection, Death and TPD products. There are no rate increases to any Trauma products. These changes include slight reductions in some large sum insured discount (LSID) rates for Death and TPD (also referred to as large case discounts and large insured amount discounts).
The tables below show the percentage premium increases that will apply.
Income Protection
| Benefit Period |
|
FLP | |
|---|---|---|---|
| Waiting period 30 days or less | Waiting period over 30 days | Any waiting period | |
| 1-year and 2-year | Nil | Nil | +15% |
| 5-year and all To-Age | +20% (Stepped and Level) | Nil | +15% |
| Lifetime | +20% (Stepped) +30% (Level) |
+10% (Level Only) | +15% |
Death and TPD
The increases to Death and TPD are comprised of either or both of the following components:
- Increases to the underlying (Flat) rate
- Reductions in large sum insured discounts (LSID)
| Benefit Type | AC&L ORD & SUP | AXA ORD | AXA SUP | FLP |
|---|---|---|---|---|
| Death Total* | Nil | 6.5% | 2.9% | 0.6% |
| Death-Flat | Nil | 4.0% | Nil | Nil |
| Death-LSID | Nil | 2.4% | 2.9% | 0.6% |
| TPD Total* | 10.0% | 20.5% | 20.3% | 10.0% |
| TPD-Flat | 10.0% | 20.0% | 20.0% | 10.0% |
| TPD-LSID | Nil | 0.4% | 0.3% | Nil |
* Totals could be higher or lower in some cases because the large sum insured discount (LSID) figures in the table show aggregate premium increases across all the products being repriced, resulting from the reductions in LSIDs. The maximum total increase for Death is 11.3% and the maximum total for TPD is 26.0%, both in AXA Ordinary products. Customers receive different LSID changes depending on their sum insured.
Large sum insured discounts are not guaranteed and can change. There is more information about large sum insured discounts below. Please also refer to the relevant PDS or policy document.
When do the changes take effect?
The new premium rates apply for policy anniversaries on and after 17 January 2022.
Why are premium rates changing?
Resolution Life, like all insurance companies, periodically reviews premium rates taking into account a range of factors including changes in the cost and duration of claims and external conditions affecting the wider insurance industry.
Most Australian life insurers are facing challenges because of the higher incidence and rising cost of claims, particularly for income protection insurance where customers are remaining on claim for much longer than in the past. In the year to June 2021 the life insurance industry in Australia lost $345.5 million in individual disability income insurance (income protection).* Industry regulator APRA has acknowledged that this is not sustainable and has challenged the industry to review and adapt their insurance portfolios.
To ensure our products are sustainable over the long term, Resolution Life is increasing premiums to our products where there is a need to address rising claims costs and to ensure we can continue to maintain a sustainable portfolio that will meet future claims from customers.
* APRA quarterly Life insurance performance statistics to June 2021
How frequently do you review premiums?
We review our premiums on an ongoing basis to ensure our offering remains sustainable and that it keeps customers protected with the highest quality products.
Which products are impacted?
The following products are affected by these rate changes:
- Elevate
- Other former AXA products that were historical within the NMLA life company
- AC&L historical products
- Flexible Lifetime Protection (including historical product sets)
Are there any changes to discounts?
Yes. While association and reward discounts will be unaffected by these premium rate changes, we are making some changes to large sum insured discounts (LSID).
What is changing with large sum insured discounts (LSID)?
LSID is an inbuilt product discount within Elevate and Flexible Lifetime Protection (FLP) that applies at varying rates based on the size of the sum insured or monthly benefit. Generally, the larger the sum insured, the larger the discount.
In Elevate and FLP Death and TPD, the discount generally applies if the sum insured is $250,000 or higher. However, it is not a guaranteed discount.
While all current LSID discounts remain in place, we’re making some reductions in discount rates for Death and TPD cover for insured amounts over $500,000.
There are no changes to LSIDs within income protection products.
Are any LSIDs being removed?
No. All LSIDs remain in place and many of them remain unchanged at the same discount rate.
Can you reduce LSIDs?
Yes. Large sum insured discounts are not guaranteed and can be altered or removed. Please refer to the relevant PDS or policy document for more information.
Are you notifying customers of the changes to LSIDs?
If a customer is receiving a large sum insured discount, the dollar amount by which their premium is reduced is shown on their annual statement. If their LSID rate changes, the revised discount amount will show on their annual statement at their next policy renewal. The percentage amount of the LSID discount or percentage by which it has changed is not shown.
The educational flyer we have prepared for advisers to distribute to their customers if required briefly explains that reductions in LSIDs are a contributor in some cases to the overall premium increases.
While we’re notifying customers of the overall increase in premium rates via a significant event notice (SEN) in their policy annual renewal statements, we’re not specifically informing them of the reductions in LSIDs that contribute to some of the premium rate increases.
Are there any other increases as well as premium rate changes?
Yes. In a small number of cases we’ve inadvertently been undercharging the amount of stamp duty on some customers’ insurance premiums. We’re not backdating an adjustment of these underpayments but will apply the correct stamp duty amount from 17 January 2022 and notify customers in annual renewal notices from 1 December 2021, in line with the wider premium rate changes.
How will you communicate to advisers about these changes?
- We’re emailing advisers late November 2021 to tell them about these changes and why we’re making them.
- Additional information may be placed on this web page through the implementation of the rate changes.
- Your Business Partnership Manager will be available to explain these changes if necessary and address any concerns you may have.
How will I get a quote for my customers that includes the new rates?
The new rates will be available in Illustration Plus from 1 January 2022.
Will my commission change?
Commission rates have not changed, however there may be a change in renewal commission in line with the premium rate changes.
How and when will customers be notified of the increased premium rates?
Customers will be notified of the alterations to premiums via a significant event notice (SEN) within their annual policy renewal statements from the following dates:
- 1 December 2021 for Elevate products
- 3 December 2021 for FLP products
We’re therefore gradually notifying customers as their annual policy renewal statements are sent out over the 12 months from December 2021, rather than informing them all at once.
As always, customers will be encouraged to talk to their adviser before making any decisions about their cover.
What happens if my customer is on claim?
If your customer is on claim when premium changes are applied, the changes will still apply to the plan. If premiums are being waived, the customer will not be affected by the new rates until they resume premium payments. At this point, the new rates will be applied. If your customer’s claim is being assessed on the premium due date, they must still pay the premium. (The payment may be refunded if the claim is paid).
Will my customer’s monthly benefit change if they’re on claim?
There is no change to your customer’s monthly benefit as a result of the premium changes.
If my customer has an association or rewards discount, will it remain?
Yes, the discount will continue to be applied to the customer’s premium. However, while large sum insured discounts (LSID) will also remain, we’re reducing the quantum of the discounts in some cases.
There are no changes to Multi plan discounts or Trauma overlay discounts.
How can customers change their insurance?
Customers can change their insurance to meet their current needs. Some ways customers can save on their cover include:
- Changing waiting and/or benefit period
- Removing automatic indexation increases
- Reducing their level of cover.
Our website has further information for customers about premium affordability and options for reducing their cover.
