The proposed three year responsibility period continues to sit at the centre of negotiations around the Life Insurance Framework, with the Association of Financial Advisers (AFA) demanding clarity from the insurers around lapses.
AFA chief executive, Brad Fox, said he believed the insurers needed to clearly differentiate between the different types of lapses for the new regime to have genuine meaning and to work.
“If the insurers cannot differentiate between the different types of lapses and how they occur, then the three-year responsibility period is simply going to be too long,” he said.
Fox said that, as things currently stand, the lack of clear differentiation between what is and is not lapse was putting too much responsibility on the shoulders of advisers.
“It is effectively shifting the burden from the insurers to advisers,” he said.
Ironically, the lack of clarity around what is and is not a lapse represents the same stumbling block which stood in the way of the industry reaching agreement on a life/risk formula nearly five years ago.
In the meantime, it is understood that the Assistant Treasurer, Josh Frydenberg, has not yet taken the issue to Cabinet.
