CommInsure eyes deferred lifetime annuities

CommInsure is looking to expand its annuity offering as it sees opportunity in the fast-approaching deadline for superannuation funds to develop comprehensive retirement income products (CIPRs).

The life insurer, which is in the process of changing ownership from CBA to AIA, is the second-largest player in annuity products after Challenger.

Most of CommInsure's annuity sales are from its fixed term products, but it is now working on deferred lifetime annuities.

"We have been looking at them for some while. The July 1 regulation changes have provided certainty around social security means testing," CommInsure head of annuities George Lytas told Financial Standard.

"They give retirees and planners the option of customising [their retirement income portfolio] in that they can elect to defer the income payment start date," he said.

On July 1, the government extended age pension concessional benefits to a wider range of retirement income products.

Lytas also thinks that DLAs could find use in developing comprehensive income retirement products (CIPRs).

Superannuation trustees are required to have a retirement income strategy in place from 1 July 2020 but are not required to offer CIPRs until 1 July 2022.

Layering an account-based pension with a deferred annuity product, could be a useful strategy in developing these products, Lytas said.

"We will be looking at how we can package up a solution for industry funds. The process we would go down would be of co-design and testing solutions for their members," he said.

Australians spent $3.9 billion on immediate annuity purchases in the year to March, according to Strategic Insight.

There are only three players in the segment.

Challenger has an 88% market share on annuities,  followed by CommInsure ( $458 million in sales for year ending March) and Westpac ($3.8 million in sales).

Read more: CommInsureChallengerGeorge LytasAIAAustraliansCBAFinancial StandardStrategic InsightWestpac
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