AFA 2017 National Adviser Conference

Life Insurance Industry Problems Can Be Overcome

Lapse rates in the life insurance sector are not a serious issue but life insurers should work together to prevent financial advisers from engaging in the process, according to the ANZ Group Executive Wealth Australia, Alexis George.

ANZ Group Executive Wealth Australia, Alexis George

ANZ Group Executive Wealth Australia, Alexis George

Speaking on a life insurer’s panel at the AFA National Adviser Conference on the Gold Coast, George said the insurance and advice sectors should move on from Report 413 and that she did not consider lapse rates a significant problem across the industry.

“I don’t believe, and I don’t think anyone in this room believes, that lapsing is a serious issue in this industry. I genuinely believe 99.9 percent of advisers come to work to do the right thing for their customers, every day every time,” George said.

Adding that no one insurer could be aware of the behaviour of all insurers, George endorse a mandatory reference checking scheme for people who moving within the advice sector and called for it to be administered by a third party.

“The idea for mandatory reference checking for people that move around…is one step forward,” George said, adding “It has to be carried out by some independent body and the AFA can play a role in that because we don’t all know the bad guys.”

George also called for a collective effort to tackle the lack of consumer trust and said the actions of one insurer had an impact on all insurers.

“I think our industry is like a big ball of rubber bands and we each try to differentiate ourselves, which is great, but we are in a serious trust deficit as an industry,” George said.

“We can all move a little bit and one rubber band goes from the ball a little bit – but ping, as soon as something is on the front page of any paper we’re all back together in this big rubber band ball,” she added.
“We’ve got to genuinely attack the problems in our industry because trust is not earned in one day and it is going to take years to rebuild from where we are today.”

  • BKY

    Alexis…sorry but you have no clue. How can you suggest we move on from report 413 when it has been used to rewrite regulatory guidelines that have crucified the Adviser and then in the next sentence you state the lapse rates and dare I say the “churning” issue is not and never was the systemic problem that report 413 lead the regulators to believe.

    I’m guessing you have suggested we move on because you and the FSC have succeeded in transferring more risk onto the adviser…. you know lower adviser commissions and longer mandated claw back provisions equalling higher profits.

  • Didn’t ANZ just sell their Life Insurance business? Is that how we overcome our problems?

    • ken

      No ! They sold off the old investment stuff !! YOU KNOW things that they no longer think are important and are effecting the bottom line for their shareholders.
      But !!! Give it time Comminsure got out ! MLC got out ! and I doubt they will be the last.
      Makes you wonder what the banks were thinking when they bought these Life Companies in the first place?

      • JM

        They couldn’t find a buyer for the life business.
        Banks are selling life business is because they don’t deliver returns. That’s why prices for the life co sales have been low or buyers haven’t been found.
        And the reason the life companies don’t deliver returns? Well, for starters, they lose lots of money on certain products year after year – especially income protection and trauma products. No surprise that these products rely most on having high ratings and this is where the products sold are way too complex and way too generous, and the life co’s can’t (or won’t) charge enough for them.
        For the life of me, I don’t understand why the life companies have put so much energy into things like the LIF reforms and are not dealing with this core problem.

  • Old Risky

    Alexis is merely throwing advisers own words in our face, because the banks & FSC won the battle. One Paths value has increased because ANZ can spin the sale by telling a potential OS purchaser “we have reduced our operating costs-its even a better deal” That’s thanks to LIF!!!
    Ask the fund manager researchers. The banks signalled to the market that they had decided to sell their insurance arms 3 or more years ago. Then the FSC backed Trowbridge & LIF, and ex-banker Ministers supported their mates.
    But the banks still think they can still flog insurance ( not thiers ) with loans, preferably “direct style “products under ASICs anti-consumer General Advice regime, now that the “enemy ” numbers are reducing in response to LIF