LIF should target insurers, not advisers
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.
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surrounding CommInsure to argue that while customers were denied the full value of their insurance contract due to outdated policy definitions, an adviser would have been accused of churning if they upgraded the customer's policy.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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