Less than a year out from the Australian Securities and Investments Commission (ASIC) review of the Life Insurance Framework (LIF) major insurer Clearview has strongly reiterated its view that life insurance commissions should be retained.
Giving testimony before the House of Representatives Standing Committee on Economics, ClearView chief executive, Simon Swanson backed the position of no change to the LIF.
The committee is currently hearing submissions from the major insurers as part of its broader inquiry into the four major banks and other financial institutions.
Swanson said Clearview’s public policy position was that the most pressing matters for the industry, aside from managing the impact of COVID-19, remained:
• Stable life insurance commission rates with no further changes;
• Tax deductibility of advice fees; and
• Unrestricted choice of life insurance provider for financial advisers and their clients.
Responding to questioning from West Australian Labor member, Dr Anne Aly that 78% of consumers who obtained life insurance through an adviser preferred to pay an upfront fee for advice with lower insurance premiums over the lifetime of the policy, Swanson said that advisers and their clients should continue choosing the most appropriate payment method, based on a client’s unique circumstances and needs.
“ClearView does not promote one remuneration model over another for life insurance advice,” he said, noting that within the company’s LifeSolutions product series, advisers could opt to receive commissions or reduce the commission to zero and charge a fee.
Advisers could also rebate commissions to the client and charge a fee or accept a combination of fees and commissions.
The Australian Securities and Investments Commission is scheduled to begin reviewing the LIF next year but signalled to the Royal Commission in 2018 that in the absence of significant improvement on the part of the industry it was minded to recommend the removal of commission-based arrangements.