A life insurance comparison website is questioning whether moves by life insurers to increase premiums represents nothing more nor less than a price gouge.
The questioning has come from lifeinsurancedirect chief executive, Russell Cain, who has referenced letters received from a number of insurers indicating premium price rises of up to 20 per cent based on sustainability issues.
However, Cain said the price increases were coming at a time when large insurers were campaigning to slash commissions paid to advisers and this, logically, should mean cheaper premiums for consumers.
“This leads us to question whether life insurers are price-gouging,” he said.
Cain said lower commissions should mean distribution costs for insurers would be dramatically reduced, while premium price rises meant their revenue would dramatically increase.
“Together, all this does is improve the insurer’s bottom line,” he said “It’s certainly not in the best interests of consumers and neither does it help maintain the sustainability of the thousands of small financial advice businesses who provide the real human connection that clients and claimants so desperately need.
“We believe this is an attempt by some of the insurers, many of whom are owned by the major banks, to continue to push consumers into their own direct products.”
He said if commissions were reduced as proposed and prices kept rising as forecast, more advisers would exit the life insurance industry.
