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Rising Group Premiums Pose Challenges for Australian Life Insurance

Rising Group Premiums Pose Challenges for Australian Life Insurance

Rising Group Premiums Pose Challenges for Australian Life Insurance?w=400
Insurance premiums for group life policies with long-term benefits have surged between 15% to 25% on average in the first half of the year, according to a mid-year market update from Marsh Australia.
While the steepest increases affected those with adverse claims experiences, short-term rates and premiums for permanent disabilities remained relatively steady.
The sector has also become more selective, with insurers adopting stricter underwriting standards, particularly eschewing high-risk industries.

Significantly, the report highlights that some insurers, troubled by poor claims experiences, have withdrawn from markets such as law firms and insurance companies. This has led businesses to reconsider their employee benefit strategies, leading to potential reductions in group life insurance coverage. Cost-cutting measures such as these may result in individuals being left underinsured.

The causes of claims have stayed consistent, with cancer still the leading factor in life claims and mental illness prominently impacting income protection claims. Of particular concern are mental health claims, which tend to persist longer and contribute substantially to rising claims costs for insurers.

On a positive note, a significant player has reentered the corporate life insurance arena outside of superannuation, presenting much-needed capacity after recent exits by other providers.

According to the Marsh report, these trends observed in the first half of the year are expected to continue for the remainder of the year.

Published:Thursday, 28th Aug 2025
Source: Paige Estritori

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