Life insurers have made progress improving re-rating practices, marketing and disclosure materials, and product governance, regulators say.

One key change has been the adoption of new premium labels developed by the Council of Australian Life Insurers to explain price settings to customers.

“The old premium labels (i.e. ‘stepped’ and ‘level’ premiums) failed to clearly communicate that premiums could change,” the Australian Prudential Regulation Authority and Australian Securities and Investments Commission say in a joint review.

The word level created a “false perception of premium stability”, they say.

“All life companies now use variable premium instead of level premium and variable age-stepped premium in place of stepped premium.

“These new labels illustrate a difference between the two options but also highlight that either type of premium may change.”

The regulators have been monitoring the industry since 2022, flagging concerns over pricing practices, product designs and disclosure compliance.

“Throughout 2023 and 2024, life insurers and friendly societies made progress … However, given the recency of these actions, it is still too early to fully assess their effectiveness in reducing the frequency and size of premium increases.

“We encourage industry to continue to address issues of product design so products are sustainably designed and priced, with consumers’ needs in mind … life companies should design and price products with an objective of providing policyholders with certainty of coverage and reasonable premium stability.”

The regulators say a few life companies have launched products in the past year that appear to better promote sustainability and premium stability. However, product innovation is still limited.

CALI CEO Christine Cupitt says the industry shares regulators’ commitment to helping customers make informed choices.

“Life insurers have made meaningful improvements since the review began, from clearer premium communications to stronger product governance and customer support,” she told insuranceNEWS.com.au. “New premium labels and descriptions are now being used by insurers to help more simply explain how different types of premiums and products work.”