Risk Benchmarking Overview

Risk Benchmarking Research covers Australian Life Insurance companies and their life insurance products, annuities and investment bonds. It has been used for over 10 years to provide Life Insurance companies with critical market and product information, as an input to Australian financial services (AFS) licensees’ approved product list requirements and also as the underlying basis for the PFL/AFA Life Company of the Year Awards.

The in-depth holistic approach rests upon a combination of practical industry experience and disciplined actuarial methodology. Plan for Life sets its benchmarks by ensuring that accuracy of data is paramount, delivery of reports meet market requirements for timeliness and coverage of data is the most comprehensive available.

Research Process

The research process is a holistic one in that each of the key facets of Life Insurance companies and products are examined on an ongoing basis, with relevant information being sought from both the companies and external sources, in particular that published by APRA.  

The major strength of this process is that it acts as a catchment for information from a variety of sources, followed by the application of a methodology which uses a set of standards or benchmarks, enabling each company’s data to be compared against its peers and the overall industry. 

Major Benchmark Factors

1. Financial Strength

Uses four key published items relating to Capital Adequacy and Profit: (a) Capital Base (b) Prescribed Capital Amount Coverage, (c) Profit and (d) Profit Ratio (Profit/Net Assets). These items are published by APRA every 6 months. Improvement in ratios is also measured. Capital Adequacy (which is now being reported by APRA) has become available, and this will be used in the Financial Strengths factors.

2. Premium Rates

Based on a range of ages, sums assured and other variables.

3. Policy Definitions and Product Features

Extensive range of relevant Policy Definitions and Product Features.

4. Customer Service

Based on an online survey of advisers, licensees and administration support, supplemented where applicable, by additional Plan for Life review of service standards and service benchmarks, including both demonstrated and factually-supported service achievements by Life companies.

5. Market Share

Based on data collected directly by Plan For Life covering Sales, In-Force and 3 years Growth.

Additional Factors

  • Provision of varying types of Lapse Data (to be used in aggregate in forming Industry-level benchmarks).
  • Promotion of Risk Insurance at Industry level.
  • Extension of Product Improvements to existing book of business.
  • Demonstration of Product Sustainability: this will be based on reports received from companies, including – actuarial review of product sustainability and basis for Rate and Definition changes, especially where these occur so as to meet increased claims.
  • Factually-supported data from companies which demonstrates the speed at which various service elements to advisers and customers, are being met.
  • Information from companies which identifies areas of the market – premium rates and policy conditions especially – where experience indicates that these may be causing challenging conditions, worsening claims, anti-selection, or other effects which are of major importance.
  • Innovation in product design, administrative systems, adviser and licensee support.