Updated 31st January, 2025
Integrity announced that it was closing to new business in September 2023.
Since that time, Integrity has continued to service existing policyholders, pending a scheme being identified for transferring existing policies to another life insurer for future servicing.
It has been announced that Integrity policies are to migrate to AIA Australia – one of Australia’s largest specialist life insurers.
The plan that has been announced will see Integrity policies changing to an equivalent AIA policy. This is unexpected.
Specialised life insurance policies issued in Australia, including those sold by Integrity, are “guaranteed renewable” under the terms of the Life Insurance Act 1995. “Guaranteed renewable” means that the insurer cannot change policy terms and conditions and cannot cancel cover unless premiums are not paid. In previous instances, when policies have transferred between insurers (as is intended to occur in this case), the policies have continued to be exactly what they were when they were issued. The plan to change to new AIA policies is therefore unusual.
Policy definitions and features are not standardised in the Australian market. This means that no two policies are identical. For example, the AIA trauma policy is not exactly the same as Integrity’s. However, generally-speaking, all the leading life insurers offer a product suite that is very similar in definitions and features. In a very competitive market environment, it is only logical they all need to have a competitive product offering. We were supportive of Integrity partly because of their quality product offering. Simultaneously, we are also supportive of AIA partly because of their quality product offering.
Separately, it has been announced that, during the policy migration to new AIA policies, premium rates will change. The examples we have seen so far indicate a significant premium rate increase.
To our knowledge, this scheme is unprecedented. In this regard, approval by the Federal Court is required before it can be implemented. This is scheduled to occur at some time over the next month.
To again emphasise, AIA’s product offering is high quality and largely comparable to Integrity’s. We are working to identify any areas that we believe policyholders will be impacted by the change however initial research indicates no meaningful impact.
In terms of pricing changes, we are working to evaluate the impact on individual policyholders as well as to evaluate what other options exist including discount incentives offered by AIA.
In summary, we are engaged in discussions with senior AIA management on the progress of this scheme, are reviewing the impact the Integrity/AIA scheme stands to have and evaluating what options exist. We will update this post and directly contact our affected clients, when there is more clarity on the situation (i.e. when the Federal Court makes their decision).
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