In a letter to industry today,
Life companies have collectively lost around
With at least one major reinsurer indicating it was no longer prepared to reinsure individual DII,
"Disability income insurance plays a vital role in providing replacement income to policyholders when they are unable to work due to illness or injury,"
"In a drive for market share, life companies have been keeping premiums at unsustainably low levels, and designing policies with excessively generous features and terms that, in some cases, provide a financial disincentive for policyholders to return to work.
"Insurers know what the problems are, but the fear of first-mover disadvantage has proven to be an insurmountable barrier to them making the necessary changes. By introducing this package of measures,
To underline the urgency of the situation,
* ensuring DII benefits do not exceed the policyholder's income at the time of claim, and ceasing the sale of Agreed Value policies;
* avoiding offering DII policies with fixed terms and conditions of more than five years; and
* ensuring effective controls are in place to manage the risks associated with longer benefit periods.
To further assist life companies gain better insights into market trends and developments,
The letter is available on the
1/ Total losses of