Asteron premiums to increase 7.5%

The new life insurance legislation, which was introduced in draft form nearly two years ago, will significantly increase the tax paid by life insurers from July 1.

Asteron general manager of marketing and operations Antony Vriens says Asteron came to the conclusion that the fairest and most logical way to manage the tax increases was to apply the necessary increase to both existing and new stepped premium policies in the SmartLife range.

"Distributing the cost this way means the impact is minimised for both new and existing customers which is important to ensure the issue of underinsurance is not intensified.

"We think it is likely that suppliers who are not making small changes to existing premiums now may need to impose significant increases to existing customers in five years time, which may result in unintended cancellations."

Asteron's SmartLife stepped premium suite will increase by 7.5% from July 1. This works out to be an addition of around $1.88 per month for a 41 year old non-smoking male with $200,000 stepped term life cover.

Existing stepped premium SmartLife policies taken out before July will have the changes applied at the customer's next renewal date.

SmartLife level premium taken out from July 1 will see a 22% increase as it has an underlying permanent premium rate guarantee. Asteron says this means any increase in cost needs to be auctioned immediately to ensure the level premium product does not need to be cross-subsidised by other products in the future.

Vriens says premiums will always be subject to changes due to external factors, such as the government increase in GST, however it does not intend to make any additional life tax related changes in the next 12 months.

Asteron has also initiated an active Business Process Reengineering team to limit the cost impact on customers via ongoing efficiency improvements.

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Comments from our readers

On 25 May 2010 at 8:55 pm Bazza said:

Well done Asteron! this is the best and fairest way of handling these changes across a book of business. Some people in previous comments on this issue seem to forget how insurance is suppose to work.

On 26 May 2010 at 4:53 pm Edith said:

I think what Asteron are doing is wrong. There is no reason to increase premiums on existing policies that are supposed to be grandfathered under the new tax changes. These policies are not costing Asteron any more for the next fife years so why jack up the premiums??

On 27 May 2010 at 9:41 pm Dave said:

Bazza must be an Asteron shareholder - why you say?- because on 1 July Asteron's premium take on life insurance jumps by 7.5% but their tax bill remains the same. That will change over time but for now Asteron semms pretty happy to gouge its customers

Asteron premiums to increase 7.5%

Asteron will apply the life tax increases it cannot absorb itself, against its SmartLife insurance suite for new and existing customers.

Tuesday, May 25th 2010, 1:52PM 3 Comments

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