Political outlook grim on post-LIF remuneration

The major financial planning groups will have to work hard to retain life/risk premiums beyond the 2021 review of the Life Insurance Framework (LIF) if the attitude of both Coalition and Labor politicians attending the Financial Services Council’s (FSC’s) Life Insurance Conference is a guide.

While the Liberal Party’s Jason Falinksi told a conference panel that a Coalition Government would await the outcome of the LIF review before making a decision, the Opposition shadow assistant Treasurer, Matthew Thistlethwaite signalled a Labor Government was more likely to support the recommendations of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry.

In the Royal Commission’s final recommendations, the commissioner, Kenneth Hayne urged that the current cap on life/risk commissions should be reduced and ultimately set at zero.

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However, reflecting the view of many of the major life/risk insurers, Integrity Life managing director and chief executive, Chris Powell stressed the importance of advice with respect to life/risk insurance.

Further, Powell agreed with the contention that insurance advice should be treated differently to investment advice.

 

 

 

 




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If abolition of commissions in the risk insurance space happens, the outcome will be predictable and specific:-
1/. average consumers CANNOT and WILL NOT afford what it costs advisers to deliver the required advice and service within the onerous regulations
2/. under-insurance will skyrocket and as a result Social Security systems (i.e. public purse) will become overburdened
3/. insurers will downsize, offshore or simply shut up shop

NEVER FORGET........Just because a Lawyer (i.e. Hayne) says it's so, does NOT mean it is so.

I would say the political outlook for some of these self-serving politicians is more grim!

Don't recommend Insurance and stay out of the space. The Government can pay extra welfare benefits for disability support pension. Time for the Associations and dealer groups to earn their keep and start lobbying Government together just like the MFAA have for their industry. The clients will lose out at the end of the process.

WHERE ARE OUR INDUSTRY BODIES?????????? In the Mortgage Broking sector, we have MFAA and FBAA who have won the fight on the abolition of up front commissions and are winning the fight on trail..... WHO ARE OUR REPRESENTATIVES AND WHAT ARE THEY DOING?????????????????????????????????

How it is that a lawyer can charge $10K+ to assist a client claim on an insurance policy?
No laws about that...

Where the hell are our industry bodies the FPA and AFA in this??? I could not be more embarrassed by them in comparison to the mortgage broker industry bodies.
We should be screaming about the fact that the LIF was started by ASIC reviewing a mere 200 targeted files. We should be screaming that the FSC conned the government over the LIF by not providing actual lapse date. We should be screaming that the same ASIC admitted that they got it wrong after the LIF was passed and the FSC members provided the correct data. We should be screaming that Hayne got it wrong on risk insurance though ignorance of not understanding advised risk vs. direct. And we should be screaming that customers simply will not pay fees for risk advice and this will just mean no competition for the junk direct insurers just as the mortgage brokering industry did.
The corruption of the FSC and ASIC, our useless conflicted paid for industry bodies and the ignorance of the politicians makes me so angry.

Riskies. Just load your selves up with IP and TPD insurance policies and when the government removes commissions and renders us all unemployed and unemployable we can claim a mental health benefit and retire. At least we won’t have to go back to uni to study for an occupation which no longer exists

I can see the insurers starting to panic about this outcome. A few years back they participated in the 'con' about churning, thinking it would help their bottom line. It didn't and their 'direct' channels are all but dead. The irony is that it will be the insurers that will be defending Advisers (and the commission model) in 2021. But it will be too late. Without commissions, insurance won't be sold as consumers won't pay for the regulatory cost to provide the advice. Existing policy holders will be priced out of continuing to hold their cover, as insurers will seek to recover lost revenue from existing policy holders. It will be too expensive to take out or keep existing insurance in the future. Society will ultimately lose. Consumers will lose. Consumer groups will claim victory - but I am not sure over what?

Unfortunately no one other than people in the industry understand the differences between the direct and auto acceptance (junk insurance) and the advised and underwritten policies. Advisers have been lumped in with the likes of the Freedom sales reps. Its sad that the powers that be do not see that the sale of insurances under general advice to be the main cause of all the problems.

Why dot they just ban commissions for all insurances sold under the general advice model (or better yet, ban general advice). This would ensure that everyone got a personalised insurance solution which would meet their and their famalies needs should one of lifes uncertanties arise. Also, other than stand alone life insurances, advised policies are usually cheaper and far superior to direct policies, even when they pay commission to advisers.

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