The tough times in Australia's life insurance sector have forced the provider to overhaul its pricing.
ClearView has revised its pricing across its Life Solutions stepped and hybrid income protection products, as the insurer battles to remain profitable in "extremely difficult market conditions".
Facing higher expected income protection claims costs, "substantial" reinsurance cost increases and the full impact of the most recent reduction in interest rates, ClearView managing director Simon Swanson has revealed the firm will adjust premium rates ahead of an expected "wave" of changes across the life industry over the next six months.
Specifically, the firm has made a series of increases and decreases in the range of 0-10% to base premium rates for its stepped and hybrid premium lump sum cover, while also reducing size discounts for lower Life and TPD cover amounts, and for higher Trauma cover amounts.
Across its stepped and hybrid income protection products the firm will has increased benefit period for one, two and five years and accident-only cover by 10%, while also increasing benefit periods to age 60, 65 and 70 by 35%.
Additionally, the insurer has introduced a new option dubbed Indemnity 60 which it positioning as potentially a suitable lower cost option for some clients.
"This option provides a maximum 60% income replacement, with an additional income support benefit that boosts the benefit up to a 75% income replacement rate for the first six months of claim if the life insured is claiming under the one duty definition and is unable to generate any income," ClearView said.
Swanson said the life insurer also needed to follow the "substantial" change it made in 2019 to its level premium rates with another increase, as combined impact of rising interest rates and the claims outlook take their toll.
The changes will be subject to a two-year freeze period for inforce business; in a move ClearView said would ensure clients did not experience a change to their base rate across the first two years of their policy. However the new rates will apply from the second renewal.
While the firm was able to "broadly" move inforce policies to the new business rates after its 2019 revisions, ClearView said the deteriorating conditions would halt its attempts to continue the limited increase approach in 2020.
"The premium rates for these policyholders will move towards the new business rates outlined above, subject to some rate increase caps," ClearView said.
"While ClearView has continuously sought to minimise increases on parts of the inforce portfolio to support policyholders and advisers, the effects of last year's deferrals and rate change freezes mean some increases will now be substantial.
"However, none of the increases for existing policyholders will result in them being on higher premium rate bases than new business customers."
Swanson said the rate changes were "unavoidable".
"We will explain these changes to policyholders in a note that will be sent alongside annual renewal notices," Swanson said.
"We are also developing options to help policyholders manage the impact of the rate changes on them and retain their cover. Further information on these options will be provided in coming weeks."
He also said the company understood that financial advisers were under "enormous pressure for a range of reasons", and noted the new rates would only add more to their plate.
"Regrettably, today's rates announcement is likely to bring additional challenges. These changes have not been made lightly," Swanson said.
"That said, we are focused on moving toward more stable and sustainable product and pricing terms for your clients.
"I would personally like to thank you for your support to date and I hope you will continue to support ClearView as we take the painful steps to implement necessary changes over the next 6-12 months."