Insurers now need to pull their weight on LIF says AFA

More work needs to be done beyond the legislation underpinning the Life Insurance Framework, (LIF) including more work on the part insurers, superannuation funds, and the regulator to carry their share of life insurance reform, according to the Association of Financial Advisers.

Commenting on the passage of the legislation underpinning the LIF, AFA chief executive, Brad Fox pointed to the load which had been carried by life/risk advisers and said his organisation would be working to focus attention on completion of the remaining reforms by other players.

Fox's comments came at the same time as Financial Services Council (FSC) chief executive, Sally Loane welcomed passage of the legislation and said it would strengthen consumer outcomes and benefit both financial advice and life insurance.

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"We thank Minister O'Dwyer for her support and ongoing leadership in driving these reforms and thank the Parliament for the bipartisan support it has provided to these reforms," Loane said.

Reflecting the level of angst amongst risk advisers about the LIF, Fox emphasised that the AFA's advocacy had resulted in improvements to the legislation including a level playing field for advisers, with no carve-outs for direct sales of life insurance; a delayed and consistent start date of 1 January 2018; uniform grandfathering of existing clients; the inclusion of policy fees and frequency loadings for commission calculations and greater fairness in the clawback rules.

"We were able to explain to Government the impact of LIF legislation on small business advisers and this is what we believe helped us achieve improved final outcomes when compared to the recommendations put forward by the FSI and the FSC," Fox said.

"The Government listened to adviser concerns."

In a statement issued following passage of the legislation, the Minister for Revenue and Financial Services, Kelly O'Dwyer extolled the consumer benefits and pointed to the fact the ASIC review had "highlighted a connection between high upfront commissions and poor consumer outcomes".

"The review found that in some cases, advisers were receiving high upfront commissions of up to 130 per cent of the premium, which has led to unnecessary product replacement," she said.

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Noticed Suncorp's insurance profits halved in yesterdays results. MLC sold to Nippon, Tower to a Canadian insurer. The writing is on the wall. In 5 years we'll be dealing with internationals, and the chances of getting better and more successful claims and underwriting experiences will be in the laps of the offshore gods. Contracts will be materially in their favour. The local industry has shot itself in the foot.

Phil I wonder who they will blame after LIF when there are still horror stories in terms of claims in the insurance area? I am sure they will find another way to blame us somehow. Its really sad that the person in charge of this important portfolio hung her hat on the asic report, she dosent even really understand this area, the comment that some advisers were getting 130% shows a real lack of knowledge, all advisers that write business with a certian insurer get 130% if submitted online. There are also no actual real life examples cited anywhere for any of this misselling hogwash...anyway life goes on, lucky I am in the position now level commission will put me in a better spot financially in 3 years, but it still irks me that people like ODwyer cant get it, its the instos that rip people off day to day as a matter of course , increasing level premiums, changing definitions, changing dicslosure periods etc etc its not us making these changes that adversly effect clients but give instos a free kick. Of course the fat cats at the FSC are loving this, but yes Phil, they may have shot themselves in the foot we will see.

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