The Australian Securities and Investments Commission (ASIC) has confirmed that life insurance companies have been aware of advisers being guilty of “churning” policies but have failed to notify the regulator.
That confirmation came during a hearing of the Parliamentary Joint Committee on Corporations and Financial Services during which ASIC deputy chairman, Peter Kell, confirmed the level of the regulator’s knowledge.
The confirmation will annoy a number of life/risk advisers who have consistently argued that if the regulator wanted to crack down on churn then it should be working with the major insurers who hold the relevant data.
The issue was raised with Kell by Queensland Liberal National Party backbencher, Bert Van Manen who said the insurance industry needed to hold its hand up and become accountable on the question of churn.
“There are any number of insurance companies I have spoken to who actually know who these people are,” van Manen said. “A number of insurance companies will put them on level commissions. The dealer groups know who they are because they can tell by the revenue reports and replacement policies.”
Kell replied that it was interesting van Manen had made that observation “because, in collecting this information from the insurers, we have had a few instances where insurers have said, ‘Oh, yes, well, we thought that name would pop up’”.
“…I suppose we [ASIC] have been a bit disappointed in some instances that, if it is clearly an issue, it has not been drawn up before,” Kell said.
