LIF quashed advisers’ ability to simply service clients: ClearView

Further changes to life insurance commission caps could see up to 87% of financial advisers stop providing standalone risk insurance advice, according to research by ClearView.

According to ClearView’s Quality of Advice Review submission, which was based on a survey of advisers conducted by ClearView between 20 April, 2022 and 23 May, 2022, the Life Insurance Framework (LIF) had no material impact on advice quality since its introduction in 2018 and had only quashed the ability of advisers to service clients with relatively simple needs.

ClearView said its analysis showed further changes to life insurance commission caps would decimate the life insurance industry and exacerbate the nation’s underinsurance problem.

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The survey found around 67% of financial advisers would stop providing standalone risk advice and a further 20% were unsure if they would continue, if life insurance commissions were subject to further changes.

Meanwhile only 5% of advisers believed LIF had had a material impact on advice quality.

“Instead, the ongoing separation of product and advice - leading to the breakdown of vertical integration and the institutional exodus from personal advice - has had the biggest impact on lifting standards, followed by higher education and training requirements,” ClearView said.

The ClearView Quality of Advice survey also found that the advice industry was heavily dependent on life insurance commission revenue, with 94% of advisers accepting life insurance commissions.

Furthermore, 70% of advisers did not plan to change the way they charge for life insurance advice and a further 17% were unsure.

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I've already stopped as much as humanly possible. No advertising, and trying to send prospects elsewhere. Writing insurance has become a loss leader, with the reduction in commissions coming on top of the extended underwriting timeframes and requirements. Unless commissions go back up, or Life offices start offering at least a cleanskin approval process below certain levels, I'll be out of it completely. Well done to the pollies and institutions that have caused this underinsurance catastrophe in Australia, don't say you weren't warned!

Surely to goodness sake these people can see the issues if commissions are further reduced or eliminated
People will not go and pay for what they perceive as a barely viable issue. They will take the “ chance” After all Nan lived to be 90 and smoked all her life !
John had an accident and was back at work before the waiting period was up! And there is always centre link benefits to claim ! They pay heaps don’t they ? Why waste money on insurance ? No one I know has ever needed it! The old saying Insurance is sold not bought was never truer
We now have Labour are they going to stand up and sort this mess out ? Or is it going to be more of the same and worse ?? If this was happening in the building industry the CFMEU would be organising marches in George St demanding a better deal

do labor care about financial services. Never use to..not sure there votes in it either. So no, nothing will get better.

There are 3 big problems in personal insurance advice.
- Remuneration constraints (LIF) that make it difficult to get adequately paid
- Bad regulation that makes it too complex and expensive to give insurance advice
- Product issues that have made good quality IP policies unaffordable for existing clients and unattainable for new clients

Unless at least 2 of these 3 problems are fixed quickly, insurance advice is dead. Suggesting "not making LIF even worse" as a solution is fiddling while Rome burns.

No they are not. They don’t care. The less retail super the less competition for ISN intra fund insurance. They don’t care if people die uncovered. Just like the LNP didn’t care if advisers killed themselves. After all THEY killed THEMSELVES from the situation THEY found THEMSELVES in. It wasn’t the LNP and in this case it won’t be the ALPs fault. Big picture is great, progressive, cheaper, more automated. Individual picture, well we can’t help everyone can we. Pack of dogs - the lot of them.

"The ClearView Quality of Advice survey also found that the advice industry was heavily dependent on life insurance commission revenue, with 94% of advisers accepting life insurance commissions.

Furthermore, 70% of advisers did not plan to change the way they charge for life insurance advice and a further 17% were unsure."

Some creative journalism here. Was it 94% of advisers (in the whole industry) or just 94% of those surveyed (how many) which are likely to be risk centric advisers. The article needs to clarify this.

I mostly do risk insurance for fee only and clients dont have a problem and nor is it unprofitable. The main issue is the premium costs as they are becoming very high especially for the over 50s that still need to maintain some insurance.
A lot of the work I do is restructoring the costs which includes stripping the commisions out if they are new clients with existing insurances if those insurances are still with competative insururers.
The clients dont have an issue and see the value of reduced premiums with a one off fee for the advice and implementation of the advice..
On reveiw depending what is done, then it is a one off fee for advice again.
This is about advice and the product is one of the tools to meet that advice.
Whether it be maintaining and restructoring existing insurances or setting up new ones, using a fee based system is not hard.
Risk insurance is less than 15% of revenue.

I don't understand why anyone at all bothers giving insurance advice now. I started off as a life agent 30 years ago and was a big believer in it until recently. However, from an adviser's point of view, unless you are doing huge premiums, you lose money every time you help someone. From a clients perspective, when your level premium cover goes up by 100% over 2 or 3 years, you lose complete faith in the system and the 'idiot adviser' that put you into level premium 15 years ago because it was the best and cheapest long term option. What a joke.
We don't go near insurance any more, so between the 2 advisers in our practice, there's 45 years of insurance advice experience just left the industry. The industry might be just salvagable now, but it might not too.

You raise a very pertinent issue Jack, which is the erosion of client trust in their adviser when the insurance company the adviser has recommended does ludicrous things. For holistic advisers this trust erosion spills over into the broader relationship. It is another reason why holistic advisers are abandoning insurance advice.

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