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The great concern in relation to this is the lapse data,the manner in which it is recorded and the interpretation of that data by ASIC.
ASIC's focus has been in relation to the replacement of policies for the purpose of remuneration generation.
As advisers are obligated to the BID, it is sometimes necessary to provide a better strategy or product suitable to the clients needs and as client needs change.
It is simply unacceptable that a policy that may have been in place for 10 years and then is cancelled by the client (not recommended to be cancelled by the adviser) is then recorded as a lapse against the adviser's name and then potentially used against that adviser as someone who has cancelled policies without any assessment of how and why the policy was cancelled or replaced.
At present, every risk adviser will know that client's are screaming out weekly in relation to excessive and annual premium increases beyond their affordability.
Clients are either threatening to cancel their existing insurance cover or asking their adviser to consider alternatives which may or may not require a compromise in the level or type of cover, but will reduce their financial commitment.
If a client instructs the adviser to assess and recommend alternatives with a primary objective of retaining cover at a more affordable level, this potentially could be used against the adviser as an existing policy may be cancelled and therefore may be labelled as a lapse even after many years in force.
This is not right on any level.
The data that ASIC should be only assessing is policies that have only been in force for up to 2 years and have been replaced, however, the insurance companies should also be doing so much more to determine why a policy has been replaced, rather than simply recording it as a lapse.
It seems the Life Insurance companies have not done one thing since the ASIC 413 Report or the commencement of LIF to closely assess the reason for policy cancellation and to implement systems that do not implicate advisers through a single determination of a policy cancellation.