Call for More Action on Inappropriate Risk Advice

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Asteron Life Executive GM, Jordan Hawke, has called on his peers to make a more concerted effort in working to stamp out inappropriate life insurance advice practices.

Asteron's Jordan Hawke is calling on his peers to do more to stamp out inappropriate life insurance advice...
Asteron’s Jordan Hawke is calling on his peers to do more to stamp out inappropriate life insurance advice…

Addressing advisers during the insurer’s recent national roadshow series, Mr Hawke highlighted the unacceptably large number of Australians who fail to be accountable for protecting their lives and those of their loved ones. He shared with his audience a sad case study of how lives had been destroyed through a cancer victim not taking responsibility for adequately protecting her life, and the terrible impact this had on her and those close to her. He said this type of scenario ‘… plays out every day in Australia, and is typical of so many consumers.”

In discussing the critical importance of life insurance to the Australian community, Mr Hawke accepted that at times, the industry can be its own worst enemy, especially when it comes to maintaining high standards and a sustainable proposition for consumers.

It was within this context that Mr Hawke has called on his peers across the sector to be more pro-active in cutting ties with advisers who can clearly be identified as having written new life insurance policies that were not in their clients’ best interests: “As a business, we have a responsibility to protect the good guys in our industry who do a good job,” said Mr Hawke. “But of the many thousands of advisers with whom Asteron has a relationship, we identified 134 who we felt were acting primarily in their own best interests, rather than in those of their clients.”

… we have a responsibility to protect the good guys in our industry who do a good job

In clarifying with riskinfo his decision to cut ties with these advisers, Mr Hawke conceded that Asteron Life may also be the beneficiary of some new business that was not written with the client’s best interests ‘top of mind’. However he pointed out the difficulty in seeing the totality of that advisers’ activity, which he said could be viewed much better by the insurer from where the business was being removed.

“I’m a strong advocate for advisers to act in the best interests of their clients,” continued Mr Hawke. “…but given I hold a leadership role at Asteron Life, I have a moral and ethical responsibility, both to my company and to the consumer, to act when we can identify activity from a few advisers that do not reflect their clients’ best interests,” he said.

 



12 COMMENTS

  1. Interesting article, tell this to THE FPA or the ASIC who insist that education is the answer educated derelicts who could not give a heater to an eskimo . Sell what is that according to Peter Kell a dirty word, stomp out sales people who get paid by commission this FOFA thing has gone to far its destroying the very reason INSURANCE SALEMAN are paid commission and yet the FPA want to call them financial planners, The FPA wants to entrench the word into law what?

    These over educated derelicts need to have a good think about what they are doing what will be the long term damage?

    The average Australian is now out of the picture financial planning for them is much to expensive well done THE FPA THE CPA AND THE ASIC WELL DONE.

  2. Where is Asteron’s (and all of the insurers, to be honest) moral and ethical responsibility to the public and advisers to provide SUSTAINABLE product features and pricing? The hypocrites are the first to jump on and blame advisers when anything in the Industry goes wrong but have NEVER accepted their responsibility in creating the problems with their twice yearly “chasing the rainbow” “improvements” in their products!

  3. Asteron are one of the worst! Guaranteed product upgrade UNTIL they release a new product range, then increase the price of the original product by 30%, then wonder why advisers moved business!

  4. Jordan, is Asteron rebating orphan commissions to clients, or do you just keep them to boost your bottom line and hope no-one notices? How about allowing commissions to be turned off by advisers who prefer to charge differently? Sounds to me like you are attempting to paint advisers in a bad light (some who no doubt deserve it) without looking at your own skeletons?

  5. The solution is not hard:

    1.Standardise commission across all insurers on Upfront, Hybrid and Level models.

    2.Only allow Hybrid and/or Level commission models to be applied to replacement business within a 5 year period of the current business being placed.

    3.Advisers who are identified as regularly moving large volumes of client business are limited to Level commission only with all insurers or alternatively may be banned from being able to place business with insurers at the insurer’s discretion.

    This will then remove any commission bias and advice will be based on product quality, service, reputation and pricing. Market and competitive edge will be based on these factors.
    This will remove the temptation for advisers to regularly move business for the incentive payment of Upfront commission.
    This will identify and remove those advisers who abuse the system.

    This will require a cohesive and united approach from all insurers who should be required to sign a Charter or Agreement holding them to these operational parameters.

    There is no need to abolish Upfront commissions or commissions at all as some people in the media recently continue to push for. The process simply needs the co-operation of all insurers to strictly control the process and be united for the benefit of all the advisers who are trusted to provide quality advice.The insurers who provide the best products, at the best price in addition to the best levels of administrative efficiency and adviser support will be the beneficiaries.

  6. Its a tough one. An industry which cannibalizes itself and some advisers who find it difficult to resist. What is the answer? Banning up fronts altogether? Or banning them on replacement business if the original policy is less than a certain vintage? Require those who market ‘direct’ cover to ask questions re whether the cover being purchased is to replace an existing one and if so has the applicant sought advice??? The industry is in real trouble I fear for its future;

    *premiums are exploding out of control .. I have one client who received his renewal from his corporate super fund and his premium has gone from $400 per month to $1100… while at the same…
    * claims are being denied on questionable grounds… another case – the same insurer – small IP claim is being denied because their ‘independent’ medical examiner has assessed my client and feels they are able to work – despite the fact that my client is on a cocktail of prescribed meds and is under the regular care of their Dr…
    *no win no fee lawyers will have a field day

    All participants need to play a part in ensuring a successful future… its not all down to the adviser.

  7. Asteron was quick to abandon their loyal clients when they stopped the Lifeguard series and created the new series, Complete. Yes they did offer a process to transfer from one series to another, but it wasn’t seamless. The offer of $300 for writing an SoA in lieu of commission didn’t cover costs of explaining the trade off from switching from one product to another. There were improvements to the Heart Attack and Cancer definitions with Trauma, but there were downgrades in some of the ancillaries. It also paid to read the fine print on the conditions of transfer too, because the duty of disclosure went right back to day one of the old replacement policy, which might have been 7 or more years back.

  8. You must be kidding . Reading the ASIC report 413 Review of retail life insurance advice I sit here stunned. For example page 45/46 Case study 2 Stephen. “The advice to Stephen was compliant with the law”. Which experienced adviser would have ANY Occupation TPD on a self-employed management consultant? When Own is clearly correct advice. There are any number of insurers offering I.P. cover till age 70 from the example he must be earning about $190,000.00 p/a the difference in a long term claim between are 65 and 70 would be about $1,064,657.00 Let alone the part of the commentary about exploring ‘reducing the I.P benefit period ‘Its painfully obvious these people have never sat in front of a client at claim time, I hope they have their cheque books handy then , we all know they won’t or be accountable for their advice Plus for those who bang on about replacing business. If it’s the correct thing to do to protect the client I will do it in a heartbeat especially the one above. Any occ when it should be Own , give me a break !

  9. When Asteron stops accepting new (churned) policies from other insurers because it’s bad for the industry then Mr Hawke may have some credibility.

    When they receive an application that was previously with another insurer it’s quality new business, when it leaves them its churning.

    Get off your high horse Mr Hawke you are a hypocrite.

  10. We’re we not told in 2003 under ps146 that we had to give our clients the best policy for them no watering down policies to get business we agreed to do this but when we do give our client the policy they re quire all of a sudden it’s called churning the biggest churners in this business his the banks but nothing is done about them because they own the life offices do you monitor those advisers I bet you don’t so stop crapping on about the advisor work force I think Jordan it’s time for you to stop having a go at us and by they there is other life offices out there

    • Patrick,

      I suggest that your post may be able to be understood if you used some basic English language punctuation and grammar. Your sentence contains over 110 words – it makes it almost unintelligible!

      Cheers

  11. Congratulations Col,Mark and Peter for saying how it really is,it is the insurers who drive behavior with their Planners through remuneration bonus.off shore conferences/study tours etc and by the way the long lunch is still alive and well,I heard that one provider will fly you to cottage point and back for a top shelf lunch.Lets not put the blame on the Planner.

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