ClearView will stop selling agreed value income protection from next month and is repricing its products and reviewing claim assumptions after new business premiums dropped by more than a third in the six months to December 31.

Life insurance new business premiums fell 35% to $14.2 million, the company says.

In a business update to the Australian Stock Exchange last week, ClearView accused competitors of “engaging in ‘honeymoon’ discounting to maintain market share rather than focusing on delivering long-term sustainable products and transparent pricing to customers”.

“ClearView is not participating in this approach, which is impacting [our] current new business volumes,” the company says.

It will launch a new indemnity-type income protection product in the second half of this year. The insurer says this will offer a lower maximum monthly benefit at a competitive premium rate.

It expects further price changes will be made in the coming months to reflect increased claim rates.

The retail life insurance industry lost $1.1 billion on income protection products in the year to September 30, extending life insurers’ five-year losses to more than $3 billion.

ClearView says it’s disappointed the leading industry players have been unable to support sustainable business models without the intervention of the Australian Prudential Regulation Authority (APRA), “and appear to continue engaging in poor pricing practices”.

The Sydney-based insurer says it is “very supportive” of the Individual Disability Income Insurance (IDII) Sustainability Measures.

APRA introduced the new measures in December, imposing a Pillar 2 capital charge. Insurers must now take necessary action to satisfy the requirements of all stakeholders by mid-2021 or risk further action.

“Given APRA’s recent policy measures and the continued underperformance of the income protection portfolio, ClearView has already commenced a comprehensive review of its LifeSolutions IP product series with a focus on reviewing product pricing and design,” the business update says.

ClearView expects a “significant adverse deterioration in claims”, particularly in December, and higher-than-expected lapses amid challenging market conditions will lower its life insurance underlying net profit for the half-year to December 31 to $8.7 million.