THE FINANCIAL Services Council today noted the release of APRA's quarterly life insurance financial performance statistics, revealing another gloomy quarter of losses for income protection results.

FSC senior policy manager for life insurance Nick Kirwan said the current COVID-19 global pandemic has only just started to take its toll on the industry with an overall total net loss after tax of $1.6 billion for the year to June 30, 2020.  

“The industry has bounced back slightly from the poor result from the previous quarter’s loss of $972 million, with a $423 million profit in the March to June 2020 quarter,” Mr Kirwan said.  

“However, the results continue to be dominated by higher than expected claims for individual income protection insurance (IP), which saw a net loss after tax of $179 million in this product alone, wiping out almost all the profit from other individual product lines. 

“These income protection losses were driven by a surge in the number and duration of claims, especially for mental health conditions. We expect mental health claims to increase in the months and years ahead from the effects of the COVID-19 pandemic, exacerbating people’s isolation and financial hardship," Mr Kirwan said.

“The life insurance industry is playing its crucial role in protecting the Australian community. Overall, during 2019 life insurance companies paid out $12 billion to 101,821 Australians and their families. Every single day last year, the industry paid out the equivalent of almost $33 million to 279 Australians and their families, providing crucial financial support when people need it most.   

“The flip-side of that coin is that these increasing claims are the reason why many Australian households will have noticed increases in their life insurance premiums. We know premium increases are never welcome, but like any business, life insurers must balance the books. Premiums coming in must cover the cost of the claims going out.   

“It isn’t all bad news on premiums though, life insurance companies all have in place measures to help customers in financial hardship. If you need financial help you can contact your life insurance company or financial adviser.  

“Looking further ahead, most life insurance companies are busily developing a new generation of simpler, more sustainable income protection policies that focus on covering core needs. These new policies will give customers more choice, and will be all about the three A’s: 

• Availability of financial protection for Australians today, and for future generations;  
• Affordability so that Australians can afford the cover they need, both now and into the future; and 
• Assurance that your life insurance company will be there for you when you need to claim.  

“Expect to see this new generation of more sustainable income protection policies becoming available in the next year or so,” Mr Kirwan said.  

Quarterly Life Insurance Performance Statistics:  https://www.apra.gov.au/quarterly-life-insurance-performance-statistics  

About the Financial Services Council 

The Financial Services Council (FSC) has over 100 members representing Australia's retail and wholesale funds management businesses, superannuation funds, life insurers, financial advisory networks and licensed trustee companies. The industry is responsible for investing almost $3 trillion on behalf of more than 15.6 million Australians. The pool of funds under management is larger than Australia’s GDP and the capitalisation of the Australian Securities Exchange and is the fourth largest pool of managed funds in the world. 

ends

A PARLIAMENTARY inquiry into the impact of the exercise of law enforcement and intelligence powers on the freedom of the press has recommended measures to improve public interest protections and transparency, with a report tabled today.

Chair of the Parliamentary Joint Committee on Intelligence and Security, Andrew Hastie, said the Committee acknowledged the role of a free press, and that the investigation or prosecution of journalists and media organisations can affect the perception of the freedom of the press in Australia.

"Our report recommends that the role of Australia’s Public Interest Advocates be expanded to consider a broader range of warrant applications that may affect journalists and media organisations in instances of unauthorised disclosure of information," Mr Hastie said.

The report also includes recommendations for additional transparency in warrant applications, and recommendations related to the Public Interest Disclosure scheme which allows public officials who suspect wrongdoing to report their concerns. These reforms are aimed at ensuring that appropriate avenues exist for Commonwealth officials to raise their concerns before it is necessary to approach external parties.

"The issues related to law enforcement, intelligence powers and press freedoms are complex, and this inquiry has allowed the Committee to examine a range of matters in great detail," Mr Hastie said.

"This is an evolving area of law, and the Committee welcomes recent steps taken by Government to bolster the decision-making process when journalists and media organisations are involved in the investigation and prosecution of unauthorised disclosure of information."

The report can be obtained from the Committee’s website. 

ends

THE Financial Services Council (FSC) today welcomed the passage of the Treasury Laws Amendment (Your Superannuation Your Choice) Bill 2019, which gives every employee the right to choose their own superannuation fund.

CEO Sally Loane said the FSC has strongly advocated for removing restrictions on choice in superannuation as there is no justification for preventing Australians from choosing a superannuation fund.

“This legislation finally ends the anachronistic practice of enterprise agreements locking workers into a specific fund and is a solid win for up to a million consumers who previously didn’t have the freedom to manage their retirement savings as they wish,” Ms Loane said.

“Many workers have been forced to choose between moving their superannuation into their employer’s specified fund or paying duplicate fees to keep multiple accounts open when they start a new job with an employer who does not offer choice – neither of which is a good consumer outcome.

“Ensuring that every Australian can choose their own superannuation fund is an important step in the modernisation and reform of the superannuation system to ensure it delivers good outcomes for all workers.

“The FSC also recognises and supports the sensible contribution to the debate by the independent Senator Rex Patrick, who amended the Bill to require the prudential regulator to review the impact of the amendments in due course and report to the Government.”

The Productivity Commission (PC) has found that an individual with two accounts over the course of their working life could be six percent worse off at retirement as a result of duplicate fees and insurance premiums. The PC also found that there were 10 million 'zombie' superannuation accounts costing Australians $2.6 billion every year in excess fees and insurance costs.

About the Financial Services Council
The Financial Services Council (FSC) has more than 100 members representing Australia's retail and wholesale funds management businesses, superannuation funds, life insurers, financial advisory networks and licensed trustee companies. The industry is responsible for investing almost $3 trillion on behalf of more than 15.6 million Australians. The pool of funds under management is larger than Australia’s GDP and the capitalisation of the Australian Securities Exchange and is the fourth largest pool of managed funds in the world.

ends

THE House of Representatives Standing Committee on the Environment and Energy is holding the opening public hearings this week for its inquiry into the problem of feral and domestic cats in Australia.  

Committee Chair Ted O’Brien MP said, "The Committee looks forward to hearing about how governments, scientists and community groups across Australia understand and manage the impact that cats have on native species and the environment.”  

On Wednesday, Australia’s Threatened Species Commissioner, Dr Sally Box, along with other representatives of the Department of Agriculture, Water and the Environment will appear before the Committee to discuss Australia’s framework for managing predation by feral cats on native wildlife and habitats.

The hearing will also consider the role of the Australian Government in bringing together key stakeholders across the nation to manage the impact of feral and domestic cats.

On Friday, the Committee’s second public hearing will hear from a range of groups about approaches to the problem including innovation, science and natural resource management. Detailed programs for both public hearings are available on the Committee’s website.

For the information of those wishing to listen to the public hearings, proceedings will be available on the Parliament’s website at aph.gov.au/live. Due to the COVID-19 pandemic, committee hearings are not presently open for physical attendance by members of the public.

Public hearing details 

Date: Wednesday 26 August 2020
Time: 10.15am to 11am
Location: Via teleconference

Date: Friday 28 August 2020
Time: 9am to 2.30pm
Location: Via teleconference

Interested members of the public may wish to track the committee via its website.

ends