Recently the Australian Prudential Regulation Authority (APRA) has been looking into the proitability (or lack thereof) of insurers and have put some policies in place in response to the substantial ongoing losses in the income protection market. These changes will have big effects on future insurance policies issued.
So what are the changes coming in March?
From the 31st of March, agreed value policies will no longer be available. This means that all policies issued after that date will be subject to the indemnity rules, meaning that you will have to prove what you earn at the time of claim rather than locking in an agreed amount at the application stage. This means that you will need to make sure that you are constantly reviewing your income protection policy going forward because if you have a higher amount and you have taken on a job earning less money or potentially have gone part time you may not get paid out for the amount of cover that you are paying for.
What other future changes are coming?
From 1st of July 2021 there are a number of future changes coming to income protection policies, these include:
In addition to all this, insurance companies will have to provide data to APRA so that it can keep an eye on what is happening.
So what does this mean for me?
If you are in the process of putting an income protection policy in place then it might be important to get moving on it quickly so that you’re not affected by the changes. If you already have an income protection policy in place then you need to be aware that by re writing your policy with another insurer after the date of the proposed changes may mean that you’re subject to the new rules and therefore disadvantaged so be sure to double check if you’re looking to move or cancel your income protection that you know the consequences of doing this.
If you have any questions about the proposed changes, feel free to email me at firstname.lastname@example.org