The Australian Securities and Investments Commission (ASIC) has signalled it will be monitoring the impacts of the changes wrought by the Life Insurance Framework to see whether they drive growth in level premiums.
However, ASIC deputy chair, Peter Kell has told a Parliamentary committee that the regulator is not currently planning to construct some sort of tracker of premium levels across different policy types as part of its review of the changes.
In doing so, Kell acknowledged that ASIC would be heavily reliant on data collected by the Australian Prudential Regulation Authority (APRA) because ASIC had not been a traditional collector of insurance data.
He said there were a lot of influences on the level of premiums in life insurance and one of the issues ASIC was interested in was whether there would be a growth in level premium policies in circumstances where, in comparison to other jurisdictions Australia had a relatively low per centage of level premium policies.
“The issue is: level premium policies are typically a bit more expensive up front but can be more affordable over the longer term; stepped premium policies are cheaper up front but then they increase. It is an interesting issue in terms of how that is explained to the consumer,” Kell said.