1 Comment 1 Commentby Matthew Martin
In an email to advisers, the health and life insurer says it's "...focused on ensuring the sustainability of our products for the long-term benefit of our clients".
"This means we are constantly measuring and monitoring the performance of our products against expectations in respect to claims, lapses, expenses and competitive positioning."
The company says a recent product review identified a need for it to adjust guaranteed level premiums for life cover.
"With effect from 1 November 2021, Level Life premium rates will increase by up to 20% for new business, which reflects our experience assumptions, and will bring our pricing for guaranteed level life premiums in line with the rest of the market."
Currently, Partner Life offers some of the cheapest level life cover in New Zealand.
For example, $500,000 worth of cover for a 40-year-old male non-smoker until age 65 would cost $99.32 a month (quotes courtesy of QuoteMonster).
Only Cigna is cheaper coming in at $98.31 a month, but it is significantly cheaper than AIA ($120.37), Asteron ($112.00) and Fidelity ($116.97).
The premium change will not apply to existing guaranteed level premium life covers (including future contractual CPI indexation increases), in keeping with the guarantee.
"As is usual, any non-CPI increases of guaranteed level premium life cover on existing policies will be priced based on the premium rates applicable at the date of increase."
Chatswood Consulting and QuoteMonster director Russell Hutchinson says the increase of level premiums is no great surprise and Partners Life often front foot decisions like these.
"Right now, I'd say a lot of life companies would be looking at increasing their level life rates...but as far as expectations of future mortality and interest rates go it is an interesting decision."
He says a recent article published by The Economist points to the fact that mortality rates in many rich countries have been slashed to below 2015 levels by Covid-19 and interest rates remain low with only small increases predicted.
"Around the rich world, life expectancy has gone backwards and it does not normally go backwards, but courtesy of covid life expectancy has fallen back quite considerably."
He says level life policies would only make up about 6% to 7% of the total number of life insurance policies in place in New Zealand.
"If you have a level life product that you don't sell much of you probably won't want to change it but I think insurers will be looking at this and making a few decisions."
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But it seems every 4-5 months there's another double digit increase on one product or another.