Only mainstream insurers want closed APLs

Only the big end of town insurers are interested in closed approved product lists (APLs), according to a life insurance panel.

ClearView managing director, Simon Swanson, told Money Management's Adviser Risk Policy breakfast panel on Thursday that open APLs were needed for healthy competition.

"It's interesting to note that it's really only the big end of town that are interested in closed APLs because they're trying to be anti-competitive," Swanson said.

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"Our view is that if you're entering our industry, make sure you have open architecture."

Bombora Advice chief executive, Wayne Handley, said if an APL were to be closed, it must be made clear to the client.

"Referring to the big end of town, for your employed advisers making charges, it's all very well to have an open APL but things like misaligned incentives need to be addressed," he said.

DEXX&R managing director, Mark Kachor, said the reality was that mainstream advisers seemed to shrink their preferred products down to a smaller number thanks to underwriting and other factors such as the client being better off getting cover straight away rather than finding they had to jump through a lot of hoops.

"The other side of it is all of the practical ones that no one seems to consider about how easy it is to get client cover as opposed to how many additional fringe benefits that might be provided between product A and product B," Kachor said.

Integrity Resolutions' principal, Col Fullagar, said every aspect of an APL should add value and the recommendations for them should be based on the appropriateness of the product and the particular individual.

"We're missing out on an opportunity by just putting half a dozen providers on an APL without having some basis for them to be on the APL in the first place," Fullagar said.

He said the people that had difficulty with claims had concerns about the conduct of the life insurer, rather than the advice, product, or adviser.

"What they need in that situation is leverage, or some form of assurance and some understanding of how the life insurer is going to or should behave in that situation and they don't have that," Fullagar said.

"We should have predicated APLs on the commitments of insurers to have some assurance of what the insurer would do and that they would make a decision based on that, I think that's a big opportunity that we are missing."

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The smaller players have "open APL's" but push the providers that they are affiliated with or get kickbacks from. Many are in it purely for financial gain rather than to serve clients.

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