A ban on group risk commission would disadvantage millions of workers, according to an industry association.
The Corporate Super Specialist Alliance (CSSA) has called on the Government to rethink its proposed ban on commissions for group risk insurance, saying that it would see Australian workers lose access to affordable life insurance.
… the Government should not be making a distinction between individual and group risk, but between advised and unadvised insurance
According to the CSSA, the Government should not be making a distinction between individual and group risk, but between advised and unadvised insurance.
“There is an assumption that all group insurance is unadvised,” said Douglas Latto, President of the CSSA. “In fact, a lot of group insurance is advised. The distinction that should be made is not between group insurance and personal insurance but between advised insurance and non-advised insurance; that is the more important distinction.”
The CSSA is proposing a new commission model for group insurance whereby the level of ongoing commission defaults to zero. Ongoing commission can then be paid at an agreed level with each employer.
“This ensures that employees continue to enjoy ongoing access to pro-active insurance advice and that advisers can afford to service them,” Mr Latto said.
The call follows Minister Bill Shorten’s comments to the Financial Services Council Conference last week, which indicated the Government was reconsidering banning commission for risk insurance where work has gone into delivering the product to an individual.
In related news, Synchron director, Don Trapnell, says his group is cautiously optimistic about the rethink on commissions, but warns the industry that “the devil will be in the detail”.
Mr Trapnell said Synchron was concerned that if the Government attached conditions, exceptions or riders to retaining commissions on life insurance within super, there may be an increased administrative burden on advice practices which would result in extra costs to consumers.
“The very last thing this industry needs is more red tape and the very last thing consumers need is for life insurance to become more expensive,” Mr Trapnell said. “Any change that would force up the cost of life insurance premiums and/or life insurance advice will hamper Australia’s already serious under-insurance problem.”
Mr Trapnell said Synchron would like to see the introduction of legislation which actively encourages, rather than discourages ordinary Australians to seek life insurance advice and obtain levels of cover which are appropriate to their needs.
“The bonus for the Government should be a declining, rather than an ever-escalating social security bill,” he said.
