Life Insurance
Product Sustainability, Financial Guidance and Genetics Regulation: The 2025 Life Insurance Appointed Actuary Forum
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In May 2025, the Actuaries Institute hosted Appointed Actuaries (AA) and their representatives from across the life insurance industry at the annual Life Insurance Appointed Actuaries Forum. Chris Scheuber, Deputy Chair of the Life Insurance Practice Committee led another insightful morning of discussion across a range of topics.
The event was opened by Scott Reeves, Senior Vice President of the Institute, who highlighted the importance of the AA role in promoting public trust in the insurance industry and the importance of the Institute in providing support to actuaries in general and the AA role in particular.
Senior Vice President Scott Reeves welcoming members to the 2025 Life Insurance Appointed Actuaries Forum.
The background here is the five-year contract term that APRA proposed as a sustainability measure and subsequently deferred, pending industry consideration of a number of meaty issues that arose.
Rob Desoisa led a very engaged discussion on this topic, showcasing an Information Note developed by the Contract Terms Working Group, which sets out a framework under which to compare various alternatives to the APRA proposal.
The quality of the discussion spoke to the importance of the issue, with one observation being why this product seems to be more problematic in Australia than almost anywhere else.
The view was that the product has become very complex over time and asking customers to make decisions at various points then requires them to wrestle with this complexity. Notwithstanding the efforts of the Contract Terms Working Group since 2024, by mid-2025, no workable solution has as yet been identified and importantly, none of the candidate solutions were considered to have a “green light” under customer-centricity, which is clearly a problem.
It was felt that there are a number of non-negotiables if premiums are to be sustainable, including that the design must allow the insurer to maintain the principle of insurable interest, which is intrinsically linked to the need to maintain appropriate replacement ratios. As with all risk businesses, product sustainability will also need a sensible commission structure.
Clearly, we are some way from consensus on this topic. A key question moving forward will be the actuarial profession’s role (through the Institute), the role of industry bodies like the Council of Australian Life Insurers (CALI) and the role of individual life companies. Rob reiterated that with the finalisation and release of the Information Note, it is an ongoing matter for users of the Information Note to consider the palatability of the various options.
Andrew Gale then presented on the equally topical subject of financial advice and the work of the Help, Guidance and Advice Working Group (HGA Working Group).
A lot is happening on several fronts in this area, albeit that progress can sometimes seem slow. An estimated 15% of Australians receive advice right now. Andrew emphasised that understanding and setting appropriate boundaries between the three strands of help, guidance, and advice is critical to improving outcomes here.
The package of reforms outlined under Delivering Better Financial Outcomes (DBFO) can be transformative if well executed. However, of the three strands, the view from the HGA Working Group is that guidance appears underdone.
Superannuation funds, with their membership base, are a critical player and an important success factor will be to optimise what a super fund can do for its membership within the boundaries of trustee obligations.
The Forum discussed the various different advice needs at different life stages, particularly the need for “hard prompts” at the point of retirement. It was observed that appropriate use of “guided prompts” by super funds at earlier stages in the members lifecycle could over time lead to material changes in the landscape for insurance within superannuation.
An important fact here is that guidance can bring the customer up to the point of making a decision, but any further than that is where guidance crosses over into advice.
The Forum also discussed that guidance and limited advice has to be disclosed as such - limited. There is then a real risk that through fear of making a mistake, a customer can find the next step just too overwhelming, and hence, there is no change in member outcomes. In particular, this last step is when the complexity of both the products and the superannuation system really becomes an obstacle to member action.
Lastly, the Forum discussed another gap – the education gap – in relation to personal finance or low financial literacy, a problem which clearly has a different solution set.
The final discussion on the topic of genetics was led by Jessica Chen.
In September 2024, following public consultation, the Government announced a total ban on the use of adverse genetic testing results by life insurers.
Once the legislation is passed, a key question for the industry is how the effectiveness of the total ban should be best reviewed. The Forum observed that genetic testing has a role to play beyond the underwriting stage, particularly in claims and claims prevention, and both the insurance industry and health professionals should have an interest in this.
It was also noted that the existence of the ban makes it difficult for insurers to collect any genetic testing information, which means that when the ban is reviewed, policymakers may need to rely more on qualitative rather than quantitative evidence.
Lastly, the Forum acknowledged that AI is progressively making genetic information available to more and more people, which will have consequences far into the future.
The session concluded with an open discussion on what additional areas should be a focus for the Institute. This ran slightly over time, which is always a good sign.
In terms of keeping the profession on the front line in the areas of most interest to the public, management of claims in respect of mental health was suggested as an addition to the list.
Given the importance of retirement income to the financial system, it was also emphasised that the Institute needs to be heavily involved in the current APRA consultation on potential changes to capital settings for annuity products.
Lastly, notwithstanding that there is a continuing focus on the sustainability of the IDII business, it was also observed that we cannot afford to be complacent about the sustainability of the lump sum insurance business.
