Enhancements to older AIA policies
23 July 2019
AIA is committed to delivering good outcomes for existing customers.
We have enhanced the following AIA Trauma, Life, and TPD policies to align with AIA REAL.AIA
- AIA Trauma Cover (inc. Vital Care) – policies issued since 1 June 2001
- AIA Life Cover – policies issued since 1 June 2001
- AIA TPD Cover – policies issued since 1 June 2001
Please note that AIA’s Income Protection policies issued since 1 June 2001 are already aligned to the AIA REAL product range.
These enhancements will take effect for new claims with a claim event date on or after 1 July 2019.
Extending the pass-back benefit
We are also pleased to advise that we have extended the AIA pass-back benefit to include all risk policies (Life, Trauma, Income Protection, and TPD) issued from 1 June 2001. Previously, the pass-back benefit applied to policies issued since 1 January 2003.
We will be writing to these customers to inform them of the product enhancements and the introduction of the pass-back benefit.
Enhancements to our June 2001 – January 2003 Trauma policies have resulted in the introduction of over 20 new full and partial conditions and a modernisation of existing definitions. These Trauma policies are currently about 25% cheaper on average than modern trauma products, which reflect differences in the product design.
In order to meet the additional claims costs associated with the Trauma enhancements, we will be required to increase premiums for these older Trauma policies. To manage affordability pressures, AIA will apply these increases gradually at a rate of 4% p.a. over the next five years (in addition to CPI and ageing increases).
We have carefully weighed the advantages and disadvantages of enhancing our Trauma products from the customer’s perspective and we believe that this approach delivers the best result for existing customers by providing these customers with modern Trauma protection.
To help manage potential affordability pressures, please check out our new flexible replacement rules (above).
What about customers holding other older products?
We are currently reviewing the design and pricing of our older products to ensure that they continue to deliver good customer outcomes. As you will appreciate, there are a number of factors to consider in managing these products, such as:
- The relationship between the product design and pricing;
- Affordability – product enhancements generally come at a cost and it’s important to consider potential affordability impacts, particularly for older customers; and
- Reinsurance – there are often distinct reinsurers supporting legacy products and there is a need to obtain agreement from each reinsurer to obtain support for any product enhancements or changes to replacement rules.
We regularly review and enhance our closed products and replacement rules. Further work is underway to review our legacy products and we look forward to communicating more changes in the coming months.
Here are some FAQs to help you.