Life insurers increasingly reliant on advisers

Life insurers are becoming increasingly reliant on sales made by aligned and non-aligned advisers, according to new data released by research house, Dexx&r.

The research, released today, has pointed to new sales of lump sum business having fallen to their lowest level in five years, with only three of the top 10 life companies recording an increase.

It said that with several major retail banks suspending or closing down direct sales of life insurance products, the life companies were now becoming increasingly reliant on sales made by aligned and non-aligned advisers providing personal advice for future lump sum new business growth.

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“Only three of the top ten life companies recorded an increase in lump sum new business for the year ending June 2018,” the Dexx&r analysis said. “AIA recorded a 32.0 per cent increase to $88 million, AMP recorded a 3.5 per cent increase to $190.1 million, and ClearView recorded a 2.9 per cent increase to $38.8 million. New sales are now at their lowest level in five years.”

It said that in the disability income market, where virtually all new business flowed from planners providing personal advice, sales were up in the June quarter and discontinuances continued to fall indicating that as direct “without advice” lump sum made an increasingly smaller contribution to lump sum new business, lump sales would return to a growth phase, albeit from a lower base.

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Shame the Life Insurance companies didn't stand up and value the quality business provided by experienced and capable advisers delivered to them during the ASIC 413 Report, Trowbridge and the LIF ?
They showed no support and no fight against the manipulated LIF on behalf of advisers because they were banking on a profitable business from direct channels despite all the warnings and commentary flowing from experienced advisers and specialist risk practices.
They could have very easily stood up and argued against the false perception of policy churn and put into place effective measures to monitor those who were repeat offenders to allow others to continue practicing and being remunerated correctly for their advice.
There were only faint murmurs from a couple of insurers, but on the whole, the lack of support for those advisers who had supported their businesses with high quality advice over many years were left out to dry and ignored.
The level of respect between the advisers and the insurers was incredibly damaged because the advisers felt abandoned and devalued. The silence from the insurers was deafening and they immediately brought out
business support programs to " assist you in navigating the new regime ".
With new sales at their lowest level in 5 years, it is not difficult to understand why.
The Life Insurance companies now have to re-think their relationship and support to quality advisers.
It's going to be a long and difficult road.

The Life insurers under the guise of the dodgy cartel FSC were all responsible for the LIF by blatantly hiding the fact that lapses under advised sales were not an issue until after the LIF was passed. A fact then admitted by ASIC in the PJC.
Now they are seeing new business drop and lapses continue to increase.
Of course lapses will increase because all of the dodgy FSC members have been increasing rates on existing customer but dropping rates for new business (trying to encourage churn) but its not working.
The LIF coupled with FASEA means the death of advised sales especially the risk advisers these companies rely on for new business.
So instead of them moaning about lack of sales get the same dodgy FSC to admit they were wrong and lobby parliament to wind back the LIF. Otherwise they are doomed too.

Whenever the government regulates how much people can charge significant issues typically arise.
I am sure there will be changes over the next 10 years as it is realised the current system does not work.

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