AIA Australia Highlights Structural Shifts in Life Insurance Industry
AIA Australia Highlights Structural Shifts in Life Insurance Industry
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AIA Australia CEO Damien Mu has cautioned that the life and health insurance industries are facing structural changes driven by mounting mental health claims, rising premiums, and ongoing cost-of-living pressures.
Speaking during the company's online Thrive for Life presentation, Mu highlighted that economic volatility, regulatory changes, and affordability challenges are rendering current life insurance models unsustainable.
Mu noted that most households could afford only two mortgage repayments if they lost their income, while premiums, schooling costs, and everyday expenses continue to rise. He also pointed out that claims patterns have shifted over the past decade, with mental health claims doubling since 2014. Approximately 70% of claims this year have come from white-collar workers, indicating that mental health issues are impacting a broad demographic.
To restore affordability and ensure product longevity, AIA Australia is focusing on sustainable pricing and severity-based product design rather than comprehensive, high-cost Total Permanent Disability (TPD) cover. The insurer's TPD Assist model, which supports clients' gradual return to work, has delivered strong outcomes and will inform future product refinements.
Mu urged advisers to reassess product selection through a long-term affordability lens, emphasising that comprehensive cover might look attractive upfront, but sustainability matters more to clients who need to maintain protection over time. He also called for industry, regulators, and advisers to collaborate in modernising best-interest duties and supporting the transition to more sustainable life insurance structures.
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Flood Insurance: A specific type of property insurance that covers losses and damage caused by flooding.
