AMP tackles premium price hikes differently
AMP is taking a different approach to many of its competitors ahead of a wave of expected premium price hikes.
Friday, February 26th 2010, 10:00AM
Premiums are expected to rise when new tax rules come into effect later this year; prompting some companies to encourage advisers sell level term policies.
AMP says it has already taken the changes into account when it repriced its policies in 2008.
"We have positioned the business appropriately ahead of life insurance tax changes," AMP's New Zealand managing director Jack Regan says.
The repricing of its life products along with "economic stress" has seen the company lose some business.
It says individual risk annual premium grew 9% due to inflation and age related premium increases as well as from higher sales. However experience losses due to pricing changes and economic stress were $14million.
Regan there were "clearly cases where customers weren't happy with price increases" however around a third of the cancelled business was with income protection policies which were not repriced.
This he attributes to economic stress.
Regan says while the company hasn't been pushing level term policies it has seen an increase in this part of its book. He says previously the ratio was around 75% yearly renewal business and 25% level term, now the mix is closer to 50:50.
He says it's hard to understand what is happening in the market as the ISI no longer splits out yearly renewable and level term in its life insurance statistics.
AMP released its results last week and said it increased its operating profit 2% to $77 million for the 12 months to December 31. Also it saw a 95% increase in cash flows during the year.
Regan says in the context of the economic environment he is pleased with the result, but it could be better.
Life insurance annual premium income increased 9% during the period.
Reagan says
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