Asteron Life has announced an Australian first in guaranteeing to hold its premium rates on newly written business from 1 July 2016*, when the new clawback comes into effect.

Asteron Life Executive Manager, Mark Vilo, said that this early promise is a direct response to adviser feedback and reflective of Asteron Life’s continued focus on developing enhancements that help and deliver on the needs of advisers and their clients.

“We’re offering this commitment not to increase premium rates for new policies to help assist with retention of customers in their initial years. We’re promising today not to reprice a new customer during the clawback period of a policy. We know that affordability can often be a key driver for lapses and by making this commitment, advisers can give their clients certainty without the concern of trying to manage a premium increase that wasn’t anticipated.

“This is just one way that Asteron Life is supporting advisers in the transition as part of the Life Insurance Framework (LIF) and aiding a positive experience for customers.”

Given lapse rates increase year on year across the industry and price is a significant contributing factor, ensuring that no premium increases will be applied throughout the clawback period will help minimise the risk of lapse.

Mr Vilo continues, “We know from our own statistics that around 5 per cent of policies lapse in the first year, 12.6 per cent in year two and 12.3 per cent in year three1. The top reason cited for lapses is price increases1. In simplistic terms, if you had 100 policies in force today, at the end of year five you would only have around 56 policies left1. That’s a sustainability challenge we have to work hard to improve.

“The long-term goal for our business is to continue to work to support independent financial advisers, help improve efficiency, and provide relevant products and make changes that ensure a positive outcome for advisers and customers. We believe this is one step towards achieving this.”

Source: Asteron Life

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