AUSTRALIA: LIFE INSURANCE INDUSTRY NEEDS MORE EXPERIENCED HANDS
The life insurance industry needs more "wise old heads" to provide an historical perspective and avoid falling into the same traps, according to a senior official of the financial services regulator, the Australian Prudential Regulation Authority (APRA). The drop in the average age of management means relatively recent crises and blunders in the insurance industry are forgotten, reported the Financial Standard, citing Mr Ian Laughlin, APRA deputy chairman. Referring to other difficulties, he said: "If the focus is on the short term, and remuneration encourages that, then the wise old heads won't be listened to." Focusing on the claims crisis currently facing the group insurance industry, Mr Laughlin explored a number of causes, including competition driving premiums too low, changing social attitudes toward mental health, and the role of lawyers.
Last year, the after-tax net profit of the life insurance sector fell to A$2.1 billion (US$1.94 billion), a decrease of 31.3 percent from the previous year's profit of A$3 billion, according to figures from APRA. Insurers' gross policy expenses increased from A$6.5 billion in 2012 to A$7.1 billion in 2013, with death and disability claims representing A$5.4 billion in 2012 and A$6.2 billion in 2013