AMP chief executive Craig Meller said in an ASX announcement that restoring the profitability of its life insurance business “will be a significant challenge”, and will not be achieved quickly or easily.
Mr Meller said people have altered the way they think about life insurance and income protection and how they use it.
“As households come under financial pressure, more people are reducing their insurance cover or cancelling their policies altogether” he said.
The frequency in claims across all types of policy, and the cost of these claims, is also increasing, partly because it takes longer to get people back to work in tougher economic times, Mr Meller said.
“Insurance has always been a cyclical business, but some of these changes in customer behavior and expectations are not part of the business cycle – they are new and they could be permanent,” he said.
Mr Meller said the insurance market has recently suffered from a “structural upheaval” and argued the current business model for insurance in Australia must change.
AMP needs to play a major role in this, he said, by helping “customers understand the real benefit life insurance offers and to make it more affordable, easier to access and easier to understand”.
“As the leading personal insurance company in the market, we are putting huge efforts into restoring these issues and developing new products that work more naturally with how people think and behave,” Mr Meller said.
