These Insurance Figures Don’t Look Too Healthy

I received a regular update notice from my insurance broker in the last week.

It was the usual and anticipated “your premiums are going up at the next annual review” type of notice.

And I was therefore about to invoke an ancient incantation which results in a swarm of locusts descending upon the head office of all the major insurance companies in Australia.

Until I read a bit further and suddenly found myself interested in the cause for this latest increase.

So What’s Causing These Insurance Premium Increases?

Apparently, industry losses for income protection policies to 30 June 2019 were $1 billion.

Not sure if this is for the full year to 30 June 2019 or a greater period, but whatever period it encompasses, that’s a huge figure.

Trauma and TPD claims were also a lot higher than what was anticipated.

Now keep in mind, we’re talking personal insurance policies.

We’re not talking car insurance policies or house and contents insurance.

We’re talking about personal insurance policies.

And the message that the insurance companies are saying is to expect significant premium increases in personal insurance policies from next year.

So What Are The Circumstances Causing An Increase In Claims?

Given that the various WorkCover schemes in all states would cover predominantly work-related injuries, it begs the questions as to what’s causing an increase in personal insurance claims.

And if the claims are relating to income-protection, trauma and TPD policies, then this suggests a possible area of which we will all feel the effects in future, in one way or another.

Mental health.

Putting aside claims relating to physical injuries outside of work (e.g. a broken leg during a skiing trip), anecdotal evidence suggests mental health claims are going to rise in future.

Specifically …

• Depression,

• Anxiety,

• Schizophrenia,

• Dementia;

• Eating disorders.

So What’s Causing The Underlying Issues Relating To These Claims?

As people who read my articles regularly know, I’m a great believer in analysing business data to learn what it tells you about your business.

This in turn, allows you to determine what’s working … what’s not … what to focus on … and ultimately how you can help your market.

A similar approach can be adopted by the insurance industry and it probably has some of the best data available to analyse and determine the underlying issues.

But at the risk of providing a simple sound-bite, I would suggest there’s a simple underlying cause.

Connection.

For whatever reason, people feel more alone now than at any time in the past.

Even when they’re with their smart devices and other people.

It’s why people need tribes, communities, family … whatever you want to call it.

And always will.

So when you lose your farm to bushfires … or a 20 year marriage dissolves and you lose access to your children … or someone close to you dies … or you lose your job to technology … or … or … or … you have the RIGHT people there who have your back.

And connection means more than the sometimes artificial posturing that appears in social media.

So How Should Insurance Companies Tackle This Issue?

The fact that insurance companies have notified of increased premiums coming may suggest that they don’t see a solution to this issue, in the near future.

Which is quite concerning.

Because if premiums keep going-up, then it will most likely get to a stage where people simply cannot afford to pay them and will drop their policies.

And then we as a national community, tribe … whatever … pay for it.

So What Should We As A Community Be Doing To Solve This?

The reality is … it’s not an issue to be solved by insurance companies.

It’s a communal issue.

But that means it will only be solved when people see how it affects them personally.

In most cases, when it starts hitting everyone’s hip-pocket.

This can happen in many ways.

• Increased insurance premiums in other areas;

• Increased absenteeism from the work-force;

• Increased presenteeism at the work-force;

• Relationship breakdowns – both business and social.

But somehow I still think the solution comes down to connection.

And the man or woman who figures it out, is the person I’d love to know.

Want to talk about your business where we create a connection?

Then over-ride the data and make a bee-line to www.sculptaccountants.com.au/contact/ and arrange a time for us to chat.

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Until next time.

Please Note: These articles are provided for education purposes only and should not be construed as specific advice. Always seek professional advice in relation to your personal and business circumstances.