IDII Series #1 – Transcript

Fraser Jack
Thank you for joining me, Katherine Hayes.

Katherine Hayes
Lovely to be here, Fraser.

Fraser Jack
Wonderful to have you on this particular podcast episode or I’ll actually the series to be to be fair. Tell us a little bit about yourself.

Katherine Hayes
Okay, so, Katherine Hayes, I’m a financial advisor based in Canberra. So I own my own practice. But I’m also involved in quite a few other projects around the industry, mostly through the AFA being the Joint Task Force, the lift group and the liquid group and a few so to speak. So I’m actively trying to get myself quite involved in learning about the ins and outs of the industry. And I participate on the odd Insurance Board here and there to

Fraser Jack
Well, fantastic you. Certainly somebody that can can give us a lot of information on this particular topic. You’ve seen a lot of stuff going on, from from all of the, you know, all of the moves, I like to call it the moving pieces of the jigsaw puzzle. Because there’s been a lot of stakeholders, I guess, with all of this, and as we’ll go through in this particular series, but you’ve managed to have a bird’s eye view about a lot of stuff that’s going on. So wonderful to have you here. Let’s start with the concept of how do we get here? Hmm.

Katherine Hayes
Gosh, so who knows when this exactly all started. But I know from participation insurance boards that the underlying message of that there was this burgeoning, this is not sustainable, you know, so much has been paid out in claims. And it hasn’t been because more insurance claims are happening than what was expected. It’s been that factor of when people going on claim this staying on claim for really long periods of time, we’ve had record low interest rates, all of these things are quite challenging. And then, you know, you throw in the mix, things like the Royal Commission, and the losses that the big installers have had, because of practices at the past that’s kind of met his perfect trifecta of all these issues. And it’s gotten to the point where APRA has stepped in and said, enough’s enough, if you’re not going to make the move we’ve been waiting for you to do it will force your hand and of course, that kicked off with the loss of agreed value contracts last year, and now these one October changes.

Fraser Jack
It’s a pretty incredible move from a regulator to step like it’s a huge deal for regulators stepping in that way. What do you think the companies didn’t step in first, or make them first,

Katherine Hayes
that first mover disadvantage? I mean, it’s not to say that some didn’t, some insurers didn’t create more sustainable versions of their products. But the take up is never going to be huge. When you’ve got more comprehensive products out there. And advisors. The biggest reason they’re saying they’re not using them is they feel like it’s going to be really hard to justify that best interest, Judy.

Fraser Jack
Yep. And you mentioned that the there wasn’t a huge increase in additional claims, or that won’t be a big still could happen off the back of a global pandemic. But tell us about the length of the claims. How did we get that so wrong?

Katherine Hayes
So from what I understand, it really came down to that. They say it’s the lack of capability causes it has been the agreed value being people being incentivized to be more unclaimed. And I think that one’s a little bit of a misnomer, I think the agreed value would have had its place just fine. If insurance companies weren’t indexing the sums insured and guaranteeing the indexes at 5%. So that’s where you get benefits growing faster than what they need to be. And then you’ve also got the issues like the three T definitions. So a lot of cases, you just didn’t have to be able to perform a single duty of your previous occupation. And that would be enough to put you on climb. So there’s really that principle of indemnity being restored to compensate you feel lost wasn’t really there. It really was just simply too generous.

Fraser Jack
It seems that the number one the number one thing is that three tier definition. Right? That’s that’s sort of the the 80%. I don’t know what the number is, but that the big chunk of what why the policies in Australia was so good compared to the rest of the world.

Katherine Hayes
Yes, absolutely. So this is where I find it quite interesting with all these new products is that rather than pulling levers, a couple of levers at a time, some of the offerings have come out and pulled all the possible levers that you could use to address the affordability factor.

Fraser Jack
Tell me about the writing software, because there’s a lot of talk about how they’re writing software, and simply just writing features and you know, writing features off against the premium price pulls that race to the bottom when you weren’t taking sustainability into account.

Katherine Hayes
Actually, that’s a tricky one. I would have loved to have seen that as a feature within all running software. I think it would be a very valuable feature because what’s the number one complaint advisors gets unexpected and continuous premium rate hikes, if you knew that was coming, you would have avoided that a lot of people would have avoided that insurer. So without that information, it doesn’t really leave you a hit. huge amount to be guided by, of course, you’ve got pricing and product features to take into account. But of course, after that you’ve also got your, your underwriting guidelines because some insurers are always going to be better than others at certain aspects. So that’s a really big factor. And then of course, your experience with the teams that are managing as far as administration claims experience, you’ve got all those those those quality overlays. But if you’re, but let’s face it, a big factor has been trying to get the best cover for your client at the cheapest price, I believe there was a period in the past where there was a look at sort of at insurers being assessed on their claims handling experience, I’ve never really seen that pulled into any reading software that I’ve looked at. So that was, I guess, a good effort. But I think it kind of fell short in the end, but sustainability. And that’s something that as part of the taskforce, we’ve had conversations with APRA is saying this needs to be this needs to be taken into account. And I think APRA is in a unique position where they have the ability to pull that data from the insurers to look at their profitability, ask the insurers to provide projections and then hold them accountable within a certain band of whether or not insurers are being sustainable or not.

Fraser Jack
Yeah, that’s a really interesting point. Because, you know, the, if we just take that the software themselves as a small piece of the decision making process, and then apply those, do you think Apple will do that?

Katherine Hayes
Oh, I think they should, I made it very clear. They said it wasn’t their job. And I told them, you know, damn well was. So let’s say we agree to disagree, but there is mounting pressure on them to be they believe that they’re not price regulators. But I’m a really big believer that you cannot manage sustainability without accounting for pricing of a product. Yeah. So the to go hand in hand. I do know that they expressed interest in gathering data, in terms of what has happened in the past and looking at historic rate rises. But that will be a really big project. But I think the next step is you need to be pressure put on them to say, well, you need to start asking for projections from the insurers because you’ve asked them to be sustainable. And if insurance can project that, which I’m sure they are. That’s what they’ve got the actuaries in the background for, you can simply ask them to provide those projections to APRA and African say, you either have or you haven’t met your expected targets within a certain band. And then that data could feed into writing software.

Fraser Jack
Yeah, this this comes, in my mind, if I, if I stopped thinking of insurance as a product that insurance companies offer, which they don’t, obviously with the contracts loyally, you apply, that instead of thinking of it as a product and start thinking more of as a as a pool of clients and the insurance company or interest of that money to do do it wisely, then maybe that that’s another way that EPA should be looking at this rather than looking at it as a product that’s being provided by an insurance company. Instead of looking at it. Everyone’s pulling the money together in the money in the bank, in the pool this particular time is what can be used. Yeah, absolutely. So take us more of a public trust type idea rather than just a just a product

Katherine Hayes
social benefit, but just happened to have a company structure, you know, behind it.

Fraser Jack
But as Kevin, thanks so much for coming on this particular episode. We look forward to catching up with you in the next one when we chat about sustainability. Thank you. Welcome to the conversation, Jeff Thurecht. Thanks,

Jeff Thurecht
Fraser. Great to be here. Looking forward to the chat.

Fraser Jack
Fantastic to have you on now. Of course, you’re the you’re a director of a business Sydney based business called Evalesco. Tony, give us a quick heads up or overview of that business.

Jeff Thurecht
Yeah, sure. So Evalesco is a business based in Sydney CBD, we’ve been up and running in this current form for about 14 years. We’ve got 24 staff, seven advisors. So I’m a, I’m a director and an advisor, probably spending more of my time on the on the director side and running the business. And I see a few less clients than I used to. And we provide holistic advice. So for a wide range of clients across the whole demographic spectrum. And insurance is a really big and important part of what we do and our background.

Fraser Jack
Fantastic year. So you can really add a lot of a lot of value to this conversation, which is fantastic. Now, of course, you’ve also been on a couple of committees and boards want to give us a quick overview of that, too.

Jeff Thurecht
Yeah, I mean, I was on the AFA board for five years. That’s a few years ago now. So I’m a little bit out of touch there. I’m on site still doing some work with the IFA on a insurance panel that they convene from time to time to discuss topical issues, including recently around the IDI changes. And I’m also on the ASIC financial advice consultation panel, which is which mates three times a year to discuss Yeah, Essex view and to seek input from advisors on various things. I’ve been on that panel for a couple of years.

Fraser Jack
Brilliant. So you, the man to talk to When it comes to IDI, and of course, the individual disability income insurance changes that took place. And this particular episode, were really honing in on, you know, sort of how to begin here, tell the past and your words or opinion, give us a quick overview of how we got to this point,

Jeff Thurecht
it’s been a pretty interesting journey. I mean, I think, in some ways where we are now has been a long time coming, but it’s all happened with a rush at the end. So it’s almost like a, you know, 15 year overnight change. I think a few things that come to my mind when I think about how we got here is that income protection has always been the cornerstone for insurance recommendations. And it’s been such an important product for advisors in their clients to recommend. And so thinking about where that said in the, in the spectrum of what was important, and people were to consider was that that was often the first place people went to look at well, does the income protection product stack up? Is it the best product? Is it a cost effective, and then if it was, often the life insurance TPD trauma would flow to that company as well. So what that meant was that for insurance companies had to get their income protection, right, to get the other business. So it was very much driven by well, how can we make it stand out from a research and a ratings viewpoint, to make sure that it’s, you know, one of the best products, so they added extra features. And then pricing became important, so you had to had discounts on the initial cost of it or trying to come in cheaper than the others to stack it up. So that you could get all the other business because you higher likelihood of missing out on the lumps on business if you didn’t get your IP, right. So that meant that there was then a bit of a, you know, a race to the bottom, I guess, on who could have the cheapest with the most features. And I think research houses played a part in that we bought in from a compliance viewpoint, you know, the research houses to make it easier for us to have the product stack up and support our recommendations. And that that meant that it was all a competition for features, as well as the premium. So I think that added to it as well. So I think that’s that’s kind of a contributor.

Fraser Jack
It’s really, obviously there’s probably a lot lot going through here. But essentially, what you’re positioning is that it’s became the lost leader, if you like for insurance companies to get or win the hearts and minds of advisors.

Jeff Thurecht
Yeah, absolutely. And then and then the claims experience obviously got away from them. And it’s been hard for them to wine that in it’s a big book of enforced business. They’ve offered some really fantastic product features and benefits to clients paid out a lot of claims, which has been fantastic for those clients, which have had it. But that’s led to some challenges around sustainability. And, yeah, it’s been frustrating, I think, from my viewpoint that, you know, I think if I had $1 for every time someone told me over the last 20 years that income protection wasn’t sustainable, I wouldn’t need any life insurance anymore. But no one can kind of, kind of move on and do anything about it, I think it’s hard because there’s a first mover disadvantage in this market. Because if you’re the first person to come out with an sustainably priced product, you’re going to be way out of the market, if you’re the first person to remove all the features and benefits, and you’re not going to stack up on a research viewpoint. So you’re going to be out of the market, which is going to make your sustainability worse, because you’re not going to get any new business. So you know, I don’t envy the CEOs of advise companies and having to make those decisions. But I do think it’s, it’s a bit sad that we got to a point where I took APRA coming in and having to bring everybody over the head and make those changes. Before we kind of bought into it. Yeah, there’s

Fraser Jack
lots of ways of seeing that, obviously, you know, the the pendulum had to swing at one point, and then in the further went one way the feather had to swing. You know, is it possible that you know, because I think what happens is you’re talking about this first mover advantage, we’re ending up with a situation where you can’t collude. Right? Because not it’s illegal to collude with the other companies and say, let’s all raise our prices together. But is that could that have been an issue as well, as you know, it could have stepped in earlier and included? or worked with him? Just to say how you make it sustainable?

Jeff Thurecht
Yeah, I mean, I wonder whether you know, that there are insurance committees around the FSC and then that type of thing where they’re talking about it, and they’re not obviously not allowed to collude, but they are all talking to each other and sharing ideas and, and that sort of thing. And I wonder whether there was some opportunities there for the FSC to just kind of facilitate some of it. And you know, cuz I guess when the regulator comes in the regulator is going to come in hard. And that’s what they’ve done. And that’s why there are massive changes right now. Whereas if we had been able to go to the regulator with some ideas or come up with some ideas ourselves and start to manage that process, perhaps we could have you know, maybe maybe it would have ended up here anyway, but it maybe it would have been a gradual process as opposed to a you know, became a smashing across the head. All in one go.

Fraser Jack
Certainly the way it feels. So obviously, there’s the product side of it, and then there’s the price side of it. Did we get both so wrong? Yeah,

Jeff Thurecht
I reckon we did. I mean, it’s hard to have on isn’t it biggest for my best interest, duty and advisor giving giving advice to clients, the products became so good that, you know, he could not recreate When there was the extra benefits, the definitions, the three tier definitions, and all those types of things which came into play, made it a really compelling product for clients. So that obviously came with a price which wasn’t priced in effectively, as we’d say, in hindsight. And I guess we probably knew, with foresight to a degree, because we’ve been talking about it being unsustainable for a long time. You know, I do do wonder how many actuaries have got sacked for, you know, missing their targets? By so far, I think if the sales team missed their target by 50%, on a consistent basis, they probably wouldn’t be in a job any longer. But, you know, they clearly got the pricing and I think, claims experience, obviously a lot worse than what they thought low interest rates in recent years is made things much harder. But yeah, I missed it by a long way. So they got both wrong.

Fraser Jack
Yeah, I do wonder whether the actuaries missed it by so much, or whether it was knowing and said, Look, we know we’re going to miss it. But as you as you sort of mentioned me before, we’re going to need to have this as a loss leader. And and talk to me about claims experience, because I think, you know, we, you know, I’m sure you administer plenty of claims, in your business, I claims giving either more claims, or are they just longer claims when it comes to finger protection?

Jeff Thurecht
We’ve definitely got more longer term claims on the go now than we ever had. I guess that’s a function of the business been around for longer and, you know, clients getting older and that sort of thing. But yeah, certainly mental health has been the one that she’s talked about the most, that’s the one which we’ve got a few clients on longer term claims for, for that, as well as other issues. But that tends to be one that sort of springs to mind. And it’s really, really, really hard. Hard on everybody hard, obviously, on the client who’s, you know, suffering that that mental illness, hard on the insurance to make that process as honorable as possible for someone who’s going through a difficult time hard on the advisor to sort of keep on top of that and support the client and hard to know when you know, when they’re right to go back to work. And, and that’s what people have found. And that’s why it is, you know, they do drag out.

Fraser Jack
Yeah. Fantastic. Jeff, thanks so much for coming on this particular episode. We look forward to chatting to you throughout the series, and we look forward to catching you in the next episode. Fantastic. Thanks, Fraser. Thank you for joining us, Natalie. Cameron.

Natalie Cameron
Oh, hi. I’m Fraser. It’s lovely to be here.

Fraser Jack
Fantastic to have you along. Now, of course, you are currently the lead ombudsman for investment advice at the Australian Financial complaints authority.

Natalie Cameron
That’s That’s right. You know, after a long career in life insurance, I’ve ended up having the fortune of being a decision maker and leading a team of decision makers at the Australian Financial complaints, authority. And so I’m, I’m really having a huge amount to do with advisors still, including on life insurance complaints.

Fraser Jack
Yep. Fantastic. It’s wonderful to have you along, by the way, and, of course, some amazing experience on your resume from working at large financial at large insurance firms all the way through to even a time working with ASIC. And from a legal background.

Natalie Cameron
You probably have to say, it looks impressive, Fraser. Thank you. It’s some it’s been a it’s been a great career to date. And I must say I’ve really enjoyed it and looking at it from a different perspective. In my current role,

Fraser Jack
yeah, it’s fair to say that you’ve spent looking at many different angles of this that we’re about to go through, we’re talking about IDI and all the changes that have taken place, and are still continuing to take place. And I guess you’ve actually seen it from a lot of angles, of course, you can always come in from all those angles representing an authority.

Natalie Cameron
Well, that’s right. I mean, Esker is an independent, alternative dispute resolution. Body, and we’re not for profit. We’re not here to make money. We’re, we’re here to help resolve complaints so that people don’t spend all of their time and money in the courts. So but we don’t make policy. You know, and we certainly leave that to the government and the regulators. We’re not actually a regulator. So, yeah, look at it. There are some things I can’t comment on. But, but certainly, lots of things I can.

Fraser Jack
And for now, let’s kick this off. We’re we’re halfway through as we, as we said before, this the changes that a lot of changes took place in October, this year, or 2021, I should say, depending on when you’re listening to this, but tell us about tell us about the background. What’s your thoughts on, you know, how we got to this place?

Natalie Cameron
Ah, you know, I think really, it was a perfect storm of a multitude of different forces that that got us here. I don’t know that there’s any one, you know, one party to blame. I mean, you know, as a lawyer, I heard the lawyers blamed a lot I you know, I you know, I heard the poor actuaries blamed or the, you know, it was it, was it the advisors of the insurance company. So, there are a lot of things that converged to lead to really more and more data products, which inevitably lead to, you know, unexpectedly large price increases over the time. And certainly from an ethical perspective, we we certainly receive a lot of complaints from consumers about whether or not their claims are paid. And those those are generally made against insurance. But we also do receive a quite a decent amount of complaints about unexpected IP premium increases. And that’s probably something that, that nobody could have foreseen, you know, a number of years ago. Yeah, there’s,

Fraser Jack
as you mentioned, the perfect storm, a lot of different things converging to create the issue or the problem. The I guess, the big thing from from our point of view, and obviously, you can’t speak on Epic point of view, but was the just the sheer amount of money being paid out? In claims that you know, that the dollar the ratio, I guess, for money being paid out, per dollar being coming in?

Natalie Cameron
Oh, look, I you know, I managed the clients function at AIA for for a period and then at MLC life and the the incoming claims, waves of claims. I mean, there’s there’s a, you know, to look at it positively these were products that really met people’s needs. And, you know, in terms of medical conditions, and certainly mental health was a significant contributing factor, just an enormous unexpected in unreserved for really amount of incoming claims.

Fraser Jack
Yep, no, the, we’ve been through the period of some really large premium shock, as you mentioned, and from from, as you said, from where you’re sitting, that that takes up a fair chunk of the the work that you’re doing, and people unhappy, Delta,

Natalie Cameron
oh, look, it’s I wouldn’t say a fair chunk. It’s certainly a decent number, though, what I get quite a bit of ease, and I should just mention that Fe can’t make decisions about whether or not the price of a product is the right price. Or even with a, you know, the cost of getting advice is the right is the right cost. But we can, we can hear complaints about bad advice, and you know, or advice that is not in the best interests, or appropriate for the, for the customer. And what has happened is that a lot of people bought these IP products, they might have been warned, you know, to some extent about, you know, the potential for premium increases, they they just didn’t expect the premium increases to be so significant. And later on, they’ll sometimes let those products go, sometimes they’ll let those products go before they and then find themselves with a medical condition. And they’ll make a complaint to Africa, saying that they weren’t properly advised about the cost, you know, of the product?

Fraser Jack
It’s certainly a very tricky one, isn’t it from I guess from a from a legal background? The warnings were there in the signs of the about the, as you said, the expectation is not a it’s almost it’s not that it’s the emotional part of our brain thinking about that, isn’t it not the logical part?

Natalie Cameron
Do you know complaints? I mean, you’ve really hit the nail on the head complaints mainly about that mismatch between expectation and the outcome. You know, people put a lot of trust into their advisors, and they reveal a huge amount of personal information, you know, medical and financial information that they probably don’t tell anyone, even people in their family in when something happens that, you know, causes them to think might not have been the best decision. For example, they’ve paid a huge amount in premiums and they, they have to let the policy lapse and they you know, or they haven’t been covered for something they expected. Yeah, it does sort of that that trust. You know, that trust can be easily, maybe not easily breached, but feel, you know, feel like it’s been breached.

Fraser Jack
It’s interesting. Nearly thanks so much for coming on and chatting to us in this particular episode. We look forward to chatting to you throughout the series, and then next one will take all the idea of sustainability.

Natalie Cameron
Okay, looking forward to it. Thanks Fraser.

Fraser Jack
Ben Martin, welcome to the conversation.

Benjamin Martin
Good. I Fraser, thank you for having me.

Fraser Jack
You’re very welcome. Yeah, give us a quick, give us a quick overview of your position at the moment with an AIA.

Benjamin Martin
I work in the Technical Services Group at AIA. So that’s code for someone that this loves the detail, the fine print that’s embedded in underlying tax, superannuation law estate planning strategies. So I spend a lot of my time working side by side with financial advisors right across the country, helping them if they need it, acting as that second opinion or sounding board whenever they are stuck, or just want to have a chat with the Techo nerd about features or parts of the underlying laws that underpin their strategic type of financial advice.

Fraser Jack
Yeah. Well, I would imagine you’re one of the busiest humans on the planet at the moment.

Benjamin Martin
Yeah, unfortunately, look, there’s lots of regulatory red tape ever changing laws, rulings and the like, that keeps me busy. And on my toes, I know, it’s not as well received on the other side by our adviser network. But look, that’s just the nature of the beast. And this is my passion. And I’m happy to be here to share some different insights. Yeah, you’re

Fraser Jack
absolutely right. You can always be the bearer of good news, but at least you that they have something to say. Absolutely. Yeah. Now, thanks very much for being part of the series we talking about. Idi, and in particular, in this particular episode with thinking about the past and how we got here, what are your thoughts on how we arrived at the space where we’re IDI IDI became a necessity.

Benjamin Martin
If I look at the previous income protection product settings, and this is obviously the world before APRA decided to step in and initiate step change and intervene. In the DIY market, we had a whole bunch of income protection contracts that were fundamentally filtered or contained with a whole bunch of bells and whistles phrase up. Now in a way that was very much a result of what we refer to as an arms race amongst the various insurers in a, in an attempt to grapple for position and for market share off the back of particular features and bells and whistles that they could offer to their income protection policyholders. That was status quo for some time. And unfortunately, in the end, that arms race led to a whole bunch of Prudential and systemic risks that began to emerge within the retail income protection space in this country. And that is fundamentally why APRA and this has been well articulated in their papers. But that is fundamentally why APRA did decide to intervene, formally intervene, and prescribe a set of measures that insurers must adhere to, if they want to continue to play in this retail income protection space from October 2021.

Fraser Jack
And he mentioned the bells and whistles. With with regards to the level of products in the old the old world. Let’s call it the old world, they you mentioned bells and whistles. Was it the definition of disability that was probably more damaging? Or was it was it do you think the bells and whistles?

Benjamin Martin
Well, probably a combination of, of birds. So when I talk about bells and whistles, what I’m alluding to there are, you know, features within the old world IP contract that had the effect of paying a monthly insured benefits that in quantum exceeded the claimants, levels of gainful employment income that they were deriving prior to the injury actually actually occurring. So APRA refer to this in their papers as overly excessive income replacement ratios. Now, those overly income replacement ratios generally came off the back of some of those bells and whistles that were traditionally tied into those old world IP contracts. The problem there is if we’ve got a disconnect between what the claimant was earning prior to the injury, and what they’re now being paid pursuant to one of these old world IP contracts, that fundamentally created a disincentive for the claimant to return to work, particularly in circumstances where they will perhaps fit and able to return to work in some capacity after the event actually occurred. So that in turn, led to a deteriorating claims experience for all the the insurance across the board. And that has got to a point where that has spiraled out of control to the point where the industry is looking at in excess of three to $4 billion of losses within this within the retail income protection books across the country.

Fraser Jack
Yet, it’s certainly unsustainable. And we’ll get into the sustainability conversation in the next episode. Talk to us about the the stats from Apple that came out, obviously, they sort of talk about things like the percentage of of the dollar that goes into a product that’s getting paid out in claims.

Benjamin Martin
Yeah, it’s interesting that so when we look at the publicly available information that APRA have published, that details, the statistical experience or the experience within the retail IP world. What we’re finding at the moment is that within the if we look at the retail IP space in isolation for every dollar of premium that’s received for these contracts, insurers on average are paying out about 75 cents in the dollar, right for every dollar premium received for a retail IP contract. That contrasts with what we’re seeing in the group, salary continuance space where for every dollar of premium received, these group contracts are on average paying out $1.05 In claims. So there’s obviously red flags there, as you know, from a group salary continuance perspective. And and there’s big question marks around the ongoing sustainability within the retail IP space moving forward.

Fraser Jack
Yeah, that’s a really interesting figures in that, that ASIC, the APRA, I should say paper, including non advised individual and not advise group. Sorry, not sorry, not advise individual thing, right up to about 120% of every dollar. Definitely unsustainable. But it’s not just around getting it under the dollar, is it because that’s what would a sort of a normal level be is still 70 or 70 to 75%? I think it’s still too high. 77% is still too high from an individual advise product. Yeah,

Benjamin Martin
correct. And so remember, this is why APRA had stepped in, in the first place, they have identified the Prudential risks that have been emerging within this within retail IP for some time. And if we don’t, I guess, toe the line and come to the party with these APRA measures, then there’s a big chance that these products will remain unsustainable, and as a big chance that insurers will start to remove their retail RP products from the market, and most importantly, that’s going to have damaging consequences for our strength clients and consumers in the long run. Yeah,

Fraser Jack
I guess the good news story about that, that’s past claims history is that that money is going to people who need it most. That’s right.

Benjamin Martin
Yeah, absolutely. Right. And that’s why we’re here. At the end of the day, we want to make sure as an insurer that our policyholders our customers, Australians have that peace of mind that they can fall back onto a robust contract that will replace a portion of their income, should they should they become temporarily disabled oil. And so that’s ultimately why we’re in the business, we want to ultimately ensure that clients not only are living healthy, healthy lions prior to the trigger event occurring, but you know, if there is an if God forbid, the client does suffer from one of these unexpected illnesses, there’s confident peace of mind knowing that there’s one of these robust contracts that they can fall back onto.

Fraser Jack
Yep. And to in my brain, the way that I the way that I think about this is the fact that it obviously there’s a pool of people all putting the money in and the insurance company is not necessarily the issuer of product, although technically it is. It’s the the administrator of that pool and to make sure that the money is paid out fairly. And obviously, the more generous the contract, the more easier it is to claim and the more that money’s paid out, so then the pool has to obviously be topped up by the consumers that are essentially made the pool.

Benjamin Martin
Correct. Yeah. That’s That’s right.

Fraser Jack
Ben, thanks so much for coming on this episode. We look forward to chatting to you about sustainability in the next episode.

Benjamin Martin
Thank you, Fraser.