Partners Life bucking the trend with premium reductions – chief actuary lifts the lid

Partners Life bucking the trend with premium reductions – chief actuary lifts the lid | Insurance Business New Zealand

Life & Health

Partners Life bucking the trend with premium reductions – chief actuary lifts the lid

New pricing part of three-phase changes

Life & Health

By
Terry Gangcuangco

At a time when prices are going up, including those for insurance, Partners Life is bucking the trend with its premium reductions. Here, chief and appointed actuary Kate Dron (pictured) lifts the lid on the insurer’s new pricing, which is phase one of changes for Partners Life policyholders.

“Given the cost-of-living crisis that’s going on at the moment, we looked at were there any opportunities for us to do anything to actually help our customers out,” Dron told Insurance Business. “That’s why we honed in on looking at our policy fee… We’ve done quite a bit of work making sure that we’re as lean as we can be and we’ve got some cost savings coming through.

“We’ve also increased our high sum insured discount, which results in a cheaper premium, but we’ve done that off the back of experience. We’ve seen that some of our bigger policies tend to have better life insurance experience. Basically what we’ve done is we’ve said, ‘Well, where we’re getting better claims experience coming through, we should allow those policyholders to benefit from that as well’.”

For the Partners Protection Plan, the new annual policy fee is $100 – a decrease from $132. Meanwhile the premium rates for larger sums assured have been adjusted across life, life income, terminal illness, and accidental death cover.

The chief and appointed actuary noted: “The final thing that we did was we’ve reduced our accelerated trauma on our yearly renewable premium. We’ve reduced that by 10%. It’s a trauma cover that you have to buy with life insurance, and we can see that there’s cross-subsidisation between the life cover and the accelerated trauma. What we’ve done is we’ve allowed for that in our underlying accelerated trauma rates.

“So, that’s looking at the way that we do things and the way that we run our business and making sure that we’re doing it as efficiently as possible. And where we’re able to do that, we’re seeing that it’s fair for us to allow the customer to share in some of those cost savings, which is why we’ve implemented these changes.”

Timing of pricing review

Aside from the current economic environment, another key factor that influenced the decision to review the company’s portfolio was the recent M&A (mergers and acquisitions) activity involving Partners Life.

Prior to being acquired by global life insurer Dai-ichi Life in 2022, Partners Life itself bought BNZ Life from National Australia Bank.

Dron said: “Once those transactions went through, that gave us an opportunity to take a step back and go, ‘OK, how are we now able to do things better?’ Obviously, with getting BNZ Life on board, we’ve got a bigger portfolio of business and we can spread our costs a bit better.

“Also, when you are going through these types of transactions, you are looking at your business and figuring out how you are doing things and whether you are doing things in the most efficient way. So, being involved in those transactions has allowed us to really put a good lens on our business and say, ‘Here are some things that we can do better which actually reduce our costs’, and that allows us to pass that on to our customers.

“What we did is we’ve looked at our expenses, our underlying expense base, and said, ‘Can we make ourselves more efficient?’ And we’ve had to also look at our claims experience. For our life cover where we’ve reduced the premiums for higher sums insured, we’ve got clear experience showing us that that is something that’s supportable. We’re comfortable that our claims experience is supported by our premium rates.”

Further changes

The premium adjustments, meanwhile, are just the start of changes for Partners Life policyholders.

“We’ve got three-phase changes that we’re making,” Dron told Insurance Business. “What we’re doing next is we’re making our products more flexible. We had existing built-in features, and we’ll now allow customers to opt out of some of them. What we’re about to [officially] announce shortly, is a specific injury option and our critical illness option that customers can opt out of on our disability income.

“Obviously, opting out of those two benefits – if the customer and the adviser agree that they are no longer required – comes with a reduced premium. So, this isn’t a price reduction per se; what we’re basically saying is that we’re giving more flexibility to customers.”

The abovementioned phase two, according to the chief and appointed actuary, is slated for August.

“Then probably around October, we’re looking to do TPD (total permanent disability) opting out. Trauma currently has a built-in TPD feature. We’ll allow customers to opt out of that, and that will also come with a premium discount,” she said.

“If customers can’t afford the full product, rather than cancel it completely and not having cover, this is a way that we can allow them to keep the product in a more affordable way, by removing some of these extra benefits that we’ve got. Some of these benefits our competitors don’t have on their product anyway, so this gives customers an opportunity to have a like-for-like comparison with our products.”

Set up in 2011, Partners Life currently insures more than 300,000 lives.

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