Minister Bill Shorten said he expects the insurance industry to deliver a solution to the issue of churning, indicating that he will not take direct action, at least in the short term, to address the controversial practice.
Responding to a series of questions from riskinfo in relation to churning, including whether he would look to introduce legislation to prevent life insurance churn, the Minister’s office issued a single-line statement:
“The Minister’s expectation is that the industry will follow-through on their commitment to develop a workable solution.”
To date, the industry has been unable to reach consensus on how to best address churning. Last month the Financial Services Council (FSC) announced it would not pursue its controversial insurance framework (see: FSC Abandons Churn Policy), amid criticism that life companies do not have sufficient data to determine how widespread the problem is.
Both the Association of Financial Advisers (AFA) and the Financial Planning Association have confirmed they are also working on the issue of insurance churn, together with broader industry topics including underinsurance, but at this stage neither association has issued a formal proposal for wider discussion.
While Minister Shorten’s statement would indicate he is happy for the industry to continue down the self-regulation path, recent comments by the Australian Securities and Investments Commission (ASIC) suggest the regulator does have evidence of churning and that it intends to act against the perpetrators (see: ASIC Churning Decision ‘Baffling’).
In the course of recent ASIC investigations and surveillance work we have seen some inappropriate switching out of life insurance policies
It is not the first time that ASIC has indicated it would focus its attention on the insurance industry. Speaking at the AFA’s National Conference in October last year, ASIC Commissioner, Peter Kell, said: “In the course of recent ASIC investigations and surveillance work we have seen some inappropriate switching out of life insurance policies, resulting in detriment to consumers” (see: ASIC Watching For Advisers Who Churn).
More recently, an ASIC spokesperson told riskinfo the regulator was “… considering issues raised by recent developments with industry initiatives around churn and the implications for dealing with it”.
Mr Shorten issued no comment in relation to whether he supported ASIC in its pursuit of inappropriate insurance switching.
Just vote SHORTEN out and get ANZIIF the FPA AFA and what ever other associations there are to get its members to sign a petition against this nonsense.
If an Insurance company has a serial churner it will take action NM and other former companies just cancelled agreements and I saw one do it just last week.
With any luck Shorten has only got “a short term” come September this union, sorry industry fund lackey will be no more!
If insurance companies are unable to deal with the FEW churners themselves, then its time for them to get out of the business.
Bill Shorten has other more pressing issues to deal with now. So if ASIC is still looking at churning, they will need to find out from experts in the Life Industry, the exact figures, cause and reason.
Only once accurate and relevent data has been collated, can ASIC then call for Industry input to solve the known issues, based on facts, not heresay.
Comments are closed.