Partners Life set to increase premiums
Over the past 19 months Partners Life says it has paid out more in claims than expected and will increase its premiums by six to seven per cent from February 21 next year.
Tuesday, December 7th 2021, 1:45PM 
13 Comments
According to a statement from the insurer, it has "...accepted and paid out materially more in claims than our historical claims experience indicated we would".
It says since Partners last reviewed its yearly renewable premium rates the company has found that "...premium rates no longer accurately reflect our claims risk and will need to change accordingly".
"We expect to increase our overall premium rates across all Yearly Renewal Term (YRT) policies by an average of 6-7% from the end of February next year."
However, the company says this won't be a broad-brush approach and after some careful data analysis, it will be targeting "pockets" of clients "...whose claims experience has disproportionately contributed to the overall emerging claims experience and the need for these overall price increases".
"Rather than a one-size-fits-all pricing increase for all client demographics, we have made the decision this year to strategically shape our pricing to match the risk that each demographic group presents for each product type."
Partners Life says it believes cross-subsidisation is inherently unfair and the results of its client demographic analysis have been nothing short of eye-opening.
"For those who are currently in a demographic that is disproportionately claiming, their premium rate increase for that product will be higher (and in some cases substantially higher), while those within demographic groups at the other end of the claims experience spectrum will experience a much more modest rates increase.
"We also appreciate that from an industry competitiveness point of view, our new pricing will change the landscape significantly.
"We will become less competitive for some client demographics in respect to new business."
Partners Life is encouraging advisers to view a presentation on its pricing approach for more detail about the changes.
Premium changes:
- Approximately 20% of YRT policies will increase by less than 10%.
- Approximately 40% of YRT policies will increase by between 10% and 15%.
- Approximately 30% of YRT policies will increase by between 15% and 20%.
- Approximately 10% of YRT policies will increase by over 20%
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While you can argue cross-subsidies are inequitable, insurance is all about cross-subsidies and I would have thought they would think about their customers (particularly when many have struggled through covid) and be very considered about how quickly they tried to unwind any "cross-subsidies" through large premium increases.
but the stats say:
80% of policies will increase by more than 10%
40% policies will increase by more than 15%
10% of policies will increase by more than 20%
and that's going to be on top of YRT age-on-age increases that were already locked in.
And all of that comes on top of last year's unbelievable hikes in particular for self-employed clients.
What this will look like in the real work in convos like last night. Couple in their early 30s with two little kids. Two years ago premiums were under 450 a month, now they are over 600. No amount of sauce makes it easy to swallow that.
A few of us may remember placing business with PL when other providers excluded or loaded. Why because we could get better terms and conditions. it was in our clients best interest then, but now???
See who is paying for it now. Me included as i have PL covers too. :-)
PL seem to be saying they assumed industry avg claims experience or similar but it has turned out worse than that.
You seem to be saying PL were offering better terms back in the day that is looser underwriting.
So the chickens are coming home to roost and maybe the looser underwriting led to bad claims which is now being rectified through price rises.
The customers are left carrying the can.
Noski I agree and whi would have thought - it pays to underwrite properly in the first place.
Good spotting!
The maths - if 80% of premiums go up by only 10% (the bottom of the band) then the other 20% of premiums have to decline by 5% on average to keep the overall average increase to 7%.
The corollary of this if the average increase of the above 10% band is above 10%, then the decline of the other 20% has to be more than 5%.
Thx for bringing the maths up.
These def are not set and forget policies and there is lots of work for advisers.
Maybe the quotes / projections at new business from any insurer need a health warning - current prices are no guide to the future especially if we are too loose with underwriting.
Shows one of the benefits of level premium.
I can’t imagine being a client, receiving the annual review letter which will state ‘as a loyal customer were giving you a further 1% discount’, then the next sentence being your base premium has increase by 10%, RFA has increase it by 4% and CPI is up by 5%. All this after their mortgage cover went up twice in one year, both double digit increases and the messaging was that it was just bringing their premiums in-line with market. I hope they’re going to subsidise the phone plans of advisers with large PL books as over the next 12 months because I suspect phones will be ringing off the hook with unhappy customers for the next 12 months.
It is interesting PL and AMP always seem to generate comments but are opposite ends of the spectrum.
PL has been a fast growing innovative company and no one could reasonably fail to be impressed by the innovation they have bought to the market.
It would appear PL clients are now paying the price for some of the underwriting and possibly even the product features - a message to those who think it is all about product (there has to be a balance with price, sustainability, service and claims approach).
Hubris precedes a fall and PL claiming they had a secret sauce maybe was a step too far. Hopefully PL will learn from this setback and continue to be an innovative company who does not repeat the mistakes.
AMP are a long established company that has been the cold duck of financial services - previously popular but been in decline a long time since the so called good old days. It seems as if some advisers are glad they have moved on from AMP but still hark back to a long gone period when it was popular and resent the AMP execs.
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I am sure PL talked about some competitive advantage - their secret sauce - on goodreturns.
Is their claims experience worse than the industry and worse than they expected.
Maybe they ran out of sauce. Pity for the customers.