A veteran risk adviser has responded to AMP’s significant increase in level premiums across its life insurance product range, calling it “appalling” and “beyond belief”.
In a document provided to Risk Adviser, increases in level premiums on some of AMP’s life insurance products went up by as much as 30 per cent.
For example, level premiums on AMP’s Flexible Lifetime – Protection product, with an age-determined benefit period and a waiting period of less than or equal to two months, went up by 30.25 per cent.
Similarly, level premiums on the Ex-AC&L product, with an age-determined benefit period and a waiting period of less than or equal to two months, increased by 29.75 per cent.
Other level premium increases across AMP’s life insurance products, including both the Ordinary and Super versions of its Elevate and Risk Protection Package, ranged between 16 to 23 per cent.
A veteran life risk specialist, speaking on the condition of anonymity, said for years advisers have always accepted in good faith the promise provided by life insurers that level premium rates are not “locked in” but may increase with unexpected claims experience over the life of the policy.
Further, any such increase would be similar for both stepped and level premiums in the same product, thus preserving the promised long term premium savings.
“AMP has effectively announced the death of that long term promise. Which insurer will be next to attack existing level premiums?” the risk specialist said.
“Why would any adviser now recommend to a client that they consider level premium over stepped premium to obtain promised long-term premium savings, given the recent outrageous segregation by AMP of level premium contracts from identical stepped premium contracts?
“What AMP seems to be suggesting in announcing these increases is that the actuaries who were employed to accurately cost these AMP, ACL and AXA risk products some years ago (the increases apply to policies issued before 2013) failed in their duty to accurately cost those life insurance products; that their actuarial assumptions over the longevity of the product were false.
“Apparently those actuaries could not foresee that as people age, illness might strike, and claims might just increase.”
In response, an AMP spokesperson said the premium increases reflect a range of factors, including the market environment and claims experience.
“Approximately 60 per cent of existing lump sum customers and 30 per cent of existing income protection customers have seen no change or a reduction in premiums,” the spokesperson said.
“We keep increases to a minimum, ensuring our products remain competitive and provide customers with the best possible value.”