Life/risk new sales reach 5 year low

12 December 2019

The challenges facing the life/risk sector have been laid bare in the latest data from specialist research house Dexx&r revealing a 22.1% decline in total risk new business for the year to the end of September.

What is more lower sales through advice channels has played a role.

The data, released today, revealed that total risk new business fell from $2.6 billion a year ago, to just $2 billion in September 2019 with total risk in-force having fallen 5.6% over the year to September to $15.4 billion.

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The Dexx&r analysis also reinforced the fact that concentration within the Australian life/risk market had reached a new high – something which would be even more the case once AIA Australia Limited completed its acquisition of CommInsure.

It said that once the acquisition transaction was complete, the five largest life insurers would account for 85% of the Australian life insurance market measured by in-force premiums.

The data revealed that the industry wrote $1.02 billion of lump sum new business in the 12 months ending September 2019, down 16.4% on the $1.22 billion recorded in the prior corresponding period, with this being the lowest value of new sales recorded in the past five years.

It found that only three of the tope ten life companies recorded an increase in lump sum new business – MLC with a $24.6 million increase, Zurich with an $18.2 million increase and Westpac to a $0.24 million increase.

The analysis said the continued decrease in business was the result of lower sales through advice channels and the suspension or cessation of sales of direct lump sum products by several major life companies.




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so why is this a surprise to anyone. What will be risk sales when planners start leaving in droves.
We are lucky that the Govt who is destroying this industry has a world class Welfare system that cares for people and makes it easy to claim benefits.
Just one of the unintended consequences... more to come!

hardly a surprise. but what now, we just have a banter online.

Alternative headline :
Underinsurance and cost to people’s well being and the economy reaches new high

So what are the implications of this for consumers?
- Fewer consumers are properly insured.
- More consumers will end up experiencing financial hardship.
- More consumers will become reliant on welfare.

Thanks very much Kelly O'Dwyer, FSC, and so called "consumer associations" CHOICE and CALC. You created this problem and it is only going to get worse.

wow - big surprise. Reduce the earnings while exponentially increasing the compliance burden and costs for the distribution channel........... yeah ...... great outcome. So, insurers lose their distribution channel, place less business, premiums increase, Australians remain underinsured or uninsured, life insurers invest less and make lower returns which reduces Superannuation returns which cause a greater strain on social security which demands higher taxes to compensate................... all in the name of "improved client outcomes" ............. yeah ..... geniuses at work!

Here, Here.....perfectly articulated

And it will fall another 25% next year. To provide advice and take on the financial regulation and risk does not compensate your business for the reward. Although the need for insurance advice has risen dramatically due to the miss guided action of "Protecting Your Super" which has caused significant financial loss to many family's already in the short term. It is just not worth investing the time into providing advice in this market.

The impact of the outcome of LIF and the unfounded accusation of the industry churn issue is now starting to be felt and experienced.
In addition to a relentless and unwarranted pursuit of the industry by self interest groups and political and ideological activists, it has taken an enormous toll on the self confidence, self image and identity of the many experienced and ethical advisers who used to take enormous pride in the work they did and enormous care and concern for their client's well being and financial protection.
These good people are being destroyed and broken down and the result of this is a significant decline in the placement of quality insurance and therefore the appropriate financial protection of consumers.
This is the outcome predicted by many many advisers during the last 4-5 years and specifically referred to during the LIF negotiations on so many occasions.
It fell on deaf ears and the outcome is going to continue to get a lot worse.
In order to provide quality risk advice to clients the business model must be viable and profitable.
These aspects have been decimated and Australians are worse for it.
When the call for "enhanced consumer outcomes" was so badly misguided in relation to the outcomes of the LIF they were simply empty, political marketing statements.
The reality is that many, many advisers are broken in spirit and confidence and it is quite obvious that when people are broken, the ability to function successfully,dynamically and proactively is limited.
Hence the results of what we are seeing right now.

this is a preview of what it is going to look like in 5 years with financial advice in general.

Agent 86...great comments...i am still trying to do the best for my clients but i'm cooked.

The UK went down the path of zero commissions around 2012, the exact same demented direction that has occurred here with LIF (commissions slashed to 60%) & the Bank Royal Commission - only to be shocked to discover that no life agent or employee in the UK would produce new business for less than the cost of production. More so, given the incredible amount of red tape that is required in Australia today to simply write new business.

Now, the UK commission rates are back up at 220% & they are starting to get new business written again. New Zealand, back up to 180%. The LIF laws here need to be junked, if the Govt is serious about people being insured (rather than being forced to relying on Centrelink & go fund me pages) in the event of life tragedies.

Maybe if a law forcing Estate Planning lawyers to work for free, in order to conduct their business of winding up deceased estates, was put into effect, Haynes & his lawyer mates might get the drift.

@Steve - it doesn't matter what comm rates will get to in future - we have to also contend with the Orwellian Standard 3 of the COE. Fast forward to 2024 (2 year extension not yet granted) where the advice landscape will be vastly different to what it is today. The remaining 7,000 advisers with their MBA/MFP/PhD/[insert preferred AQF level 9 or higher quals] will service their maximum 100 clients @ minimum $10k pa per client. Insurance advice will be provided as FFS with comms dialed down to 0.00% but at a cost of between $5k to $10k a pop. The current 5 insurance companies will merge into max 3 big boys who will only provide cover to the ISA funds - dominated by SunQ Super and Aust Super. There will be a plethora of other nimble insurers that will emerge with better pricing/t&cs,highly efficient underwriting and properly re-insured who will only deal with the advised channel. The remaining unadvised populace will utilise AI for piece-meal advice. Oh....and finally - there will be only 1 adviser association called FIGJAM. It will be compulsory for ALL advisers to be a member of FIGJAM as they will provide the practising certificate required for advisers to operate. FIGJAM will be fully funded by practitioners only ie; ZERO funding from any product provider and last but not least.....SoAs will finally be reduced to no more than 5 pages....as the remaining advisers will be highly qualified, ethical and provide fee for service.

bring it. I am there.

As am I my friend. But if the above scenario does come to fruition (and by all indications this is highly likely) - surely this is the antithesis of what the govt is trying to achieve. Or was it all rhetoric and bs about wanting more people to seek advice and take responsibility for their financial well being? The way everything is going right now - there will be an even more pronounced wealth divide between those who can afford to retain an adviser and the rest of the unadvised population who will be priced out of receiving valuable holistic advice. Interesting times ahead.

Well done, makes sense.

The results of government intervention into a private industry. Well done government! ASIC should be held accountable for this BS. They are regulating the Australian economy into recession. The only thing propping us up is gov't spending on the public bureaucrats, probably enforcing compliance. The private sector is dead.

It makes you wonder if the erstwhile minister Senator Jane Hume, actually gets access to these comments. Pretty much the majority of comments below are right on the money

Would the last risk adviser please turn off the lights. I can't believe there are actually advisers operating in this space. I attended my license's PD day recently and they made the comment that less than 10% were providing risk advice. Looking at the onerous compliance obligations associated with Risk Advice I would never again provide advice on this issue, it's a sure way to fail an audit. I've determined it's a)l not possible to deliver a compliant advice document covering every possible factor b) any document would cost $10K to $15K to produce c) the process with the client would involve 4-5 interviews, calls and emails, and you then have to weigh all that up with just telling the client to buy insurance during a TV commercial. I can no longer see how it's in anyone's best interest to actually get Insurance advice. Shame.

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