The new Life Insurance Framework (LIF) should be viewed as a watershed event, to which all parts of the industry should respond, according to Sentry’s Murray Hills.
Mr Hills, who is the Chairman and Managing Director of the Sentry Group, said the licensee welcomed the proposed Framework in general, but strongly opposed the three year responsibility period.
“It will be a huge impost on risk based practices to carry and will see many leave the industry resulting in a vacuum of experience and knowledge that will adversely impact consumers in the long run,” said Mr Hills.
“It is quite simply a contingent liability imposed on a business that many will find difficult to handle.”
Mr Hills believes the new regime will lead to an increase in the cost of acquisition for the small, independent practices that make up the majority of the Sentry network.
“As business owners they know and appreciate the cost of acquisition and will have to review their client service offering to ensure all increased costs are adequately covered under the new regime.
the implementation of LIF from January 2016 will impose financial pressures on poorly run businesses
“The impact of the implementation of LIF from January 2016 will impose financial pressures on poorly run businesses which will see them either departing the industry or expanding their advice pool. Neither of which is a sustainable long term scenario for the industry,” he said.
He also called on life offices to do more to address the inadequacies of the current system. He said new products, pricing and marketing were needed to enhance the life insurance advice process. In particular, Mr Hills would like to see products with a three year premium guarantee, to avoid the significant increases that now seem to occur on an annual basis.
Despite these concerns, Mr Hills Hills affirmed that he is very positive and bullish about the future of the dealer group, the future of wealth protection in general and he looks forward to working with the Sentry advisers to transition their business as the LIF changes come into effect.
“I will however continue to meet with all adviser associations and encourage them to defend the rights of their members when they encounter special interest groups who confuse turnover with profit,” said Hills.
The Sentry Group has just celebrated its 10 year anniversary.
