The Actuaries Institute has prepared a sustainability guide for life insurance products.

It says the paper has a particular focus on individual disability income, retail total and permanent disability, and retail trauma covers.

“Insurers face a number of conflicting commercial realities that, over decades, have resulted in poor outcomes for both retail disability insurance customers and insurers,” the guide says.

“Disability insurance products are complex and, historically, insurers have poorly understood the uncertainty inherent in these products that has contributed to unexpected increases in claims cost. 

“Consequently, the products have proven to be underpriced and have led to substantial industry losses.”

The institute says the guide aims to identify and address critical aspects of product design, operational practices, pricing uncertainty, risk management and risk appetite.

It also supports understanding of practices that may promote sustainability and build better frameworks to mitigate risks and improve sustainability for customers and insurers.

See the guide here.