TAL chief executive Brett Clark says that he wants the insurer to be known as a health business rather than a life insurance business, putting the desire to be number one for mental health cover at the centre of his expansion plans.
While TAL is Australia’s largest life insurer with more than $1.7 billion in superannuation fund premiums, Mr Clark acknowledged that the sector has had a difficult three years.
“Cost claims increased significantly over a relatively short period of time and were well in excess of premiums. That was obviously a difficult time for the industry, and [superannuation] funds too,” he said.
“The industry has responded and bounced back since those times. I would say that the group [insurance] market is quite competitive and there are a number of players in the market actively competing for these arrangements, and that’s generally seen prices come back down over the last couple of years.”
Australian Prudential Regulation Authority data shows that for the year ending March 31, 2017 total revenue for the life insurance sector was up 146 per cent to $37.9 billion.
Despite this, mental health claims continue to surge year on year, particularly as the stigma around reporting illnesses like depression lessens.
Last year TAL paid out more than $210 million for mental health claims, second only to the amount of claims paid out for cancer. Males received almost double the more payouts than women, getting $139 million while women received $71 million. The top two types of mental health claims were depression ($67 million) and post traumatic stress disorder ($55 million).
“Mental health is a big social issue in the community today and it is a significant factor in the life insurance sector and in our business,” Mr Clark said.
“We want to be the absolute best in the industry in terms of knowledge of mental illness … we want to be known for it.. We want to work really closely and collaborate with the mental health community and medical professionals … we are life insurance experts, but we need to bring experts into the sector and into the business to help us be better.”
In July, TAL hired its first head of mental health in the shape of former director at SportsLife iQ Glenn Baird, a support and counselling group for elite athletes.
Mr Clark said that he views TAL as a health business, with plans to link customers up with allied health professionals and providing them with detailed information about their illnesses or injuries.
“We are not at the starting line, but this is the start of a very significant capability build for us. The health angle is really important and were thinking about it a lot in our business. But we are doing more than thinking. We’re doing.”
TAL, which is fully owned by Japanese insurance giant Dai Ichi Life, is unusual in that it has a retail offering (sold via advsers) and direct offering (sold by TAL itself), but also has lucrative contracts with some of Australia’s largest super funds. These include AustralianSuper, CBUS, Telstra Super and First State Super.
Others insurers, like Commonwealth Bank of Australia’s troubled life insurance arm CommInsure, have not been so lucky.
HESTA, TWU Super, CareSuper and NGS Super (which subsequently took its business to TAL) have all given CommInsure the flick in the time since Fairfax Media launched a major investigation into its practices. This sparked internal reviews of CommInsure, and a probe by the corporate regulator, with both clearing the business of major issues.
This week Street Talk reported that the CBA chief Ian Narev may have had enough and is considering options for a $5 billion sale of CommInsure.
Mr Clark said that superannuation funds are now looking for longer-term relationships with their group insurers now, moving from a traditional three-year contract term to up to five years.
“The market is tending to move to longer-term deals because these are very large insurance arrangements and require more long-term thinking,” he said.
Source > http://www.afr.com/personal-finance/insurance/life/tal-chief-brett-clark-says-mental-health-claims-to-keep-rising-for-life-insurers-20170720-gxf95g