AMP counters loss with insurance overhaul


By Daniel Paperny

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Embedding a new framework for life insurance claims and rolling out a new offering are among the key priorities for AMP following a negative performance in its wealth protection business.

In a media teleconference in Sydney yesterday, AMP chief executive Craig Meller confirmed the group had suffered a $415 million loss in the wealth protection business from a “significant deterioration” in claims experience and capitalised losses.

But Meller said the group had taken action to steady the business and reduce capital intensity in the year ahead.

This included the consolidation of AMP’s two life insurance books – AMP Life and NMLA Life – to release $145 million in capital, as well as signing a reinsurance agreement to reduce life risk exposure.

“The impacts that were directly related to 2016 were a significant increase in claims during the course of the year that led us to experience losses which were over $100 million,” Meller said.

He noted the “significant increase” in claims in life insurance had come about due to the combination of a number of factors.

These included ongoing external scrutiny of the life insurance industry, growing consumer awareness of the value of life insurance, the changing laws around workers’ compensation and total and permanent disability (TPD), and important advancements in health and the industry’s ability to diagnose more illnesses.

In response, AMP had been looking at embedding a new approach to assessing and managing life insurance claims centred on customers’ needs rather than the product they held, the group confirmed.

“We recognised several years ago that the Australian life insurance industry needed to change in order to restore customer confidence,” an AMP spokesperson said.

“We’re in the early stages of rolling out our new insurance offer, initially being piloted in AMP Advice.

“AMP MyLife is simpler for customers to understand. It moves away from medical definitions [and] provides holistic cover [including] a requirement to choose between life, TPD and trauma.”

Meller also confirmed the group saw a significant fall in adviser numbers across its dealer groups over the last 12 months.

AMP’s total adviser network had reduced from 3,657 to 3,087 planners as AMP tightened its classification surrounding authorised representatives, with a swathe of planners retiring ahead of the introduction of higher professional standards.

However, Meller said AMP did not expect this reduction to contribute to a significant fall in cash flow for its wealth management arm.

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