Insurance in Superannuation: March Qtr 2017 | KPMG | AU

Insurance in Superannuation Newsletter: March Quarter 2017

Insurance in Superannuation: March Qtr 2017

In this newsletter we review APRA's quarterly statistics for the March quarter on the profitability of the superannuation insurance sector at an aggregate and a product level, as well as explore the mental illness.

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Key insights

Superannuation Group Lump Sum profits increased during the quarter, but remained below 2015 levels. This reflects that profits increased from $16m in the December 2016 quarter to $57m in the March 2017 quarter, compared with 2015 average of $72m.

Superannuation Group Disability Income profits remain volatile. The March quarter profit of $108m was the highest reported profit for the past 10 quarters. The improvement appears to be due to the impact of an insurer/reinsurer entering into a reinsurance/retrocession agreement that impacted the reported profit.

Observations

Life and general insurers are experiencing significant challenges with disability insurance, particular from mental health claims. KPMG presented a paper on "Balancing the Challenges of Mental Health Claims" which:

  • looks at the benefits of better understanding and addressing the social and psychosocial factors that impact both the claim incidence and recovery for mental health claims
  • discusses how Australian insurers changed claims management approaches to be more holistic and, allow for psychosocial aspects of claims and the benefits of early intervention. However, challenges remain. The paper explores two examples of how technology (e.g. cognitive intelligence) can assist; and
  • outlines some data and actuarial reserving/pricing issues given the above points.

The newsletter outlines the implications of the paper for Superannuation funds, depending on their strategy/focus.

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