LIF should target insurers, not advisers

27 July 2016

Negative reports on the life insurance industry is linked to insurers or financial service providers rather than independent insurance advisers, indicating the life insurance framework reforms unfairly targets the wrong party (advisers), a risk adviser group claimed.

The Life Insurance Consumer Group (LICG) has once again released a statement arguing that by blaming advisers, "the real perpetrators (insurers and the Financial Services Council [FSC]) get away with profiteering".

"Every institution responsible for a failing was a member of the FSC," it said.

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The LICG referred to the scandals surrounding CommInsure to argue that while customers were denied the full value of their insurance contract due to outdated policy definitions, an adviser would have been accused of churning if they upgraded the customer's policy.

"However the intent in the program was not to show the value advisers bring to their clients, it was to display lack of credibility of an insurer with allegations of impropriety and claim ‘avoidance'," it said.

It also said insurers and superannuation trustees or employer funds that were FSC members were responsible for poor consumer outcomes, and added the story was about group insurance, and insurance inside super funds.

Although the Australian Securities and Investments Commission's (ASIC's) research on retail advice and commissions was not related to the story, the LICG said coverage of the CommInsure scandal connected it with the life insurance industry and commission payments "without context or relevance".

It also said advisers were not called to participate in ASIC's research process into retail advice in life insurance and lacked checks and balances.

"Examples of failures to meet the law provided in the ASIC Report 413 could be easily explained by a lack of competence and lack of licensee supervision, but (at insurer direction?) ASIC only looked for a very specific targeted sample and only a commission correlation," it said.

"Insurers are members of the FSC, therefore the ASIC research was directed by FSC members."

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It can't be the insurers, it is always the advisers and their nasty commissions. Once we get rid of adviser commissions, we will finally solve ALL of the problems in the world.

I applaud the LICG for providing balance to the debate. This is exactly what we needed from the AFA and FPA over the last few years. Instead, ASIC, the media and the Financial Service Cartel have been allowed to unfairly slander our profession and advocate harsh changes which hurt small, independent financial planners and leave consumers worse off. All to the benefit of institutions. Shame on our professional associations. Shame.

We keep banging on about this Ben but is anyone actually listening? Instead I get a email about a payment plan for a $1,600 conference for two days from one of the associations, $1,600 for two days! To listen to who some style guru and a few product floggers, I mean cmon, get with the programme, its changing, its not about 2 day conferences listening to people that don't even do financial planning! Stuff the conferences seriously, hire a media manager and a lobbyist! Get opt in repealed! Something concrete that we need. Do some networking functions that would be great, you don't need expensive speakers there, just successful planners to speak to.

Won't happen TJ. They love their conferences and roadshows, it's the only tool they have to try and demonstrate any value. If there were no CPD points would anyone go?

Someone in Government needs to start listening to the coal face troops rather than the faceless Life companies of the FSC, a total boycott would be an interesting excersize.

Perhaps all of us with our own licensees should review our APL's with some of the more abusive members of the FSC

No we cant do that can we as that would be our own cartel behaviour ! (and we are better than that)

No, it wouldn't be cartel like behaviour, because a cartel is offering for sale goods and/or services at an agreed price across colluding but separate providers.

You are just reviewing the market available, and not allowing (or even "blacklisting") some of them for legitimate commercial reasons.

No one can force you to buy, or offer your labour and skills (yet...) - it is hardly discrimination based on racial, gender, or sexual orientation.

BTW, for those with long memories, in the 1990's the Victorian MTAA (if I recall correctly) or Victorian panelbeaters banned AAMI - no one would accept business from them due to their conduct (using 2nd hand parts, accepting quotes, then unilaterally reducing payments, etc). Unions have "blackbanned" companies and work sites... forever.

BTW, generally, I have found that outrageous and abusive policies penetrate an entire company, whether it is internal or external; poor initial administration or abusive and unfair claims administration - it is the corporate culture which has developed over time. They also go through cycles, based on new management entering, exiting, or economic results.

That is why we need a large pool of competitors that allows innovation, product development, price differentiation, contractual variety, etc. In the early-mid 1990's, there were ~45 Life Insurance Companies, of which ~20+ were active in the retail market (Remember Oceanic, Friend's Provident, Prudential, L&G, Tyndall, FAI Life, Lumley, etc?). Even if some only held licenses, did not sell directly, and outsourced coverage, there was a wide variety and range of players, products, and corporate cultures. Today, effectively, there are only 5-10.

it is very similar to the Banks - Government allows reduction in competitor numbers because they like dealing with only a few organisations:"Over a drink at the club", and because there are excuses about "Global competitiveness", "Scale", and "Internal Efficiency", while promising no reduction in competition, embedding special conditions (to evade...), monopolistic behaviour, etc. Sure...

Heaven forbid that we can insinuate that there is any "Quid Pro Quo", political support, or campaign funding...

After a bit, suddenly we see that it is back to the big getting monstrous, becoming "Too big to fail", bloated bureaucracy, internal inefficiencies, expanding rigidity, and effectively, social economic enslavement.

Hitting them in the wallet is a VERY effective way of communicating your displeasure.

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