ASIC leverages insurer lapse data

24 May 2018

Life/risk advisers who have been identified as having higher lapse rates have already been the subject of scrutiny by the Australian Securities and Investments Commission (ASIC).

ASIC deputy chairman, Peter Kell has told the Actuaries Institute that the regulator has already leveraged the data it has collected from life insurers identifying advisers with higher lapse rates than the industry average.

“We are now well into follow up work in this space,” Kell said in reference to the adviser life insurance channel.

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“This includes the collection of data on higher lapse rates from insurers to help identify potentially higher risk advisers,” he said. “We have already achieved several enforcement actions against advisers as a result of this work.”

Kell’s comments came as both he and ASIC’s new chairman, James Shipton sought to defend ASIC’s role in the context of issues which had been raised at the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry.

Like Shipton, Kell claimed that many of the instances of misconduct that had been examined by the Royal Commission had been the subject of ASIC investigations and regulatory outcomes.

“The importance of addressing these concerns has been underlined by the Royal Commission,” he said.

“The Royal Commission is also highlighting the importance of community expectations and community standards,” Kell said. “We have seen that an approach based on minimal or technical compliance with the law has, at times, been allowed to override fairness and good consumer outcomes. This will only undermine trust.”

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So ASIC can take the lapse data from Insurers now.... And the point of LIF was what? Couldn't they have just obtained the data and done their job in the first place, rather than reduce commissions, and increase responsibility periods, all to the benefit of big Insurers and to the demise of the consumer.

I think ASIC should admit that report 413 targeted the known churners and was used as a leverage for more funding for ASIC and to hell with the 98% of risk advisers doing the right thing. They should also admit that outside of the same people lapse data has been good for the other 98% of advisers (a fact well hidden by the FSC until after the LIF was approved). In this both ASIC and the FSC have behaved unethically.

This is spot on, ASIC takes the easy fruit the known churners, says ok we use 60 advisers as the sample size for a survey of risk advice ( randomly picked of course cough cough),then its oh look they are all churning. Where is the independant research? Its a joke that ASIC gets to justify itself off lies ie manipulated statistics. Its all about controlling the sample size and the sample itself.

You need to forget this notion that 98% of advisers are or have been doing the right thing, it's not right. Bank Advisers, of which there's thousands, will automatically recommend the replacement of every policy a client has in place regardless of whether it's in their best interest. They have targets to meet and managers to appease. These people don't get recognised as churners because they generally don't stay at the same bank long enough or in the industry long enough. The royal commission has finally exposed the industry for the joke that it is, made up of sales people impersonating advisers, hopefully they'll all head off and become real estate agents or mortgage brokers and stop destroying our industry.

The process that brought about LIF was flawed but at the end of the day you can still make money writing risk, you just need to be efficient.

It should also be up to the Insurers to get the statistics right. At the moment if a policy holder dies or upgrades a policy it is counted as a lapse and can lead to good advisers being reported to ASIC. We all know that ASIC then don't care about the accuracy of the data their investigations are based on.

Maybe it's the current economic climate causing people to have a greater awareness of their expenses, maybe its the unusually high 20%-30% premium increases that some of my clients have experienced or maybe its that there is something in the Water I just don't know but last month I got a call from 4 existing clients as a result of them receiving their annual premium increase notices . Each of them asking, "Gordon, this premium increase is way too much, can you review our insurances to see if we can get a cheaper premium?" -
I would like to invite someone from ASIC to advise me as to what to tell these clients? What 'advice' should I provide them with? Should I be more concerned about my 'lapse rate' with this particular Insurer or should I be more concerned about what may be in my client's best interests, should I act upon their request to establish if they could in fact saving of significance ? (Putting aside the obvious 'quality of product' and a person's 'ongoing insurability' considerations ,which remain critically important especially for insurance types like IP and Trauma). Should I feel as though I am working for the Insurer or for my client? Whose interests do ASIC want me to put first as the Financial Planner in the middle of this particular sandwich ?

This royal commission needs to dig a bit deeper .start looking at accountant relationships with clients and advisors re self managed super expierence in a previous life for many people iv told a SMSF is not suitable it was for the accountant.cant do much about online do it yourself SMSF.

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