Insurers have called on Treasury to reveal some of its intentions concerning commissions for life insurance, saying more clarity is needed on the issue.
Colin Morgan, general manager of life risk Australia at Zurich Financial Services, said he "absolutely" supported more clarity from Treasury on the issue.
"It’s very unclear [because] there’s obviously been a change in Government. We have [Minister for Financial Services and Superannuation] Bill Shorten there as well, so there has been engagement with the industry, but the problem is that it’s not at a sufficient level where the industry can really have a voice at this point. There isn’t enough clarity around it," he said.
"That’s a real challenge to the industry and it’s got some long-lasting effects structurally in the way that advice works and the way consumers get protection," Morgan said.
The executive general manager of Asteron, Jordan Hawke, said he believed the lack of response from Treasury on the issue was due to the change in financial services ministers. Hawke said regardless, it would be good to get some indication from Treasury based on the discussions they have had with the industry to date.
"[It would be good] if they could give some response, to say that the direction we’re heading in and the conversations that we’re having are the right ones," he said.
Risk commissions should absolutely remain, Hawke added.
ING’s head of marketing, retail products and reinsurance, Gerard Kerr, said he wanted further clarity on how a possible ban on insurance commissions would affect insurance product structuring and how they were marketed to advisers.
"[We need] some clarity around whether commissions are going to continue or not, particularly with risk insurance. There’s obviously discussions around whether it’s part of the overall commissions debate, and [we need to] get real specific clarity to know how that feeds into how products are structured. It impacts on how it is displayed from the manufacturer to the adviser, from the adviser to the end client."
A possible ban would affect both remuneration and advice, Kerr said.
The comments came after the general manager of Treasury’s corporations and financial services division, Geoff Miller, told planners at this year’s Association of Financial Advisers conference that no decision had been made on a possible ban of commissions in insurance products.
Miller later told Money Management that whatever decision, if any, was made on risk insurance and commissions would be included in the package of reforms to be introduced in July 2012.
"The issues around commissions and risk insurance are quite different to the issues around commissions and investment advice, [so] there will be separate discussions on the risk insurance issues," Miller said.
The discussions will start early next year, he said.
