AIA Australia’s CEO has urged the life insurance industry to stay together as it debates the issues stemming from the Trowbridge recommendations.
Speaking at a recent thought leadership event hosted by riskinfo, AIA Australia CEO,Damien Mu, reflected that the broader life insurance industry supports the notion of aligning the interests of consumers, advisers, licensees and insurers. He said there is no perfect solution on adviser remuneration that will satisfy all stakeholders, and it has been demonstrated over time how difficult these issues have been to address and resolve.
…there is no perfect solution on adviser remuneration
Mr Mu commented the lack of resolution over recent years has been to the detriment of the industry and public perception. He emphasised the industry must consider the Trowbridge recommendations as a package of structural reform, and not consider the remuneration proposal in isolation. In addition, he made clear that these were “recommendations” and it was now up to industry to act – a message that he said has also been clearly given by government.
In accepting that change is coming, Mr Mu said it would be a shame if the industry became fractured by it. He said some ‘conspiracy theories’ could emerge in these emotional debates, but he called for unity, saying “We need the industry to stay together on these issues as we debate them.”
He noted that while the Financial Services Council had a difficult position in representing all the views of its constituent members, he was confident that it would come to a resolution on the reforms needed to address the Trowbridge Report and the process was working very well with the FSC focused on getting the right outcome.
…we need to achieve consensus amongst the industry to move to a model that is sustainable
Mr Mu said he does not believe a remuneration model can exist without it allowing appropriate cost recovery. “If we have a remuneration model that doesn’t support the sustainability of advice and the practicality of the work advisers do, first and foremost, and then an independent advice model, then that is not healthy, and does not achieve the desired outcome of serving consumers.” He added, “…time and debate on the appropriate sustainable remuneration framework was required in a short space of time to meet government expectations. Mr Trowbridge has put a stake in the ground, and from where the industry currently stands, it would be a significant shift … and we need to achieve consensus amongst the industry to move to a model that is sustainable.”
Mr Mu added that the debate around the reforms must recognise the important role advisers play in ensuring financial protection for their clients. “We cannot lose sight of the great work advisers do to ensure Australians have appropriate protection. Where would the thousands of Australians and their families that received a claim payment be now, if they did not seek and obtain quality advice?”
Mr Mu continued, “We are confident of getting consensus within the industry to achieve changes that are meaningful, and support what we’re all trying to achieve”. He said people are not challenging that change is required, but urged that any change should be ‘reasonable’ and undertaken within the context of the broader life insurance environment to avoid unintended consequences associated with change.
The call for unity also extended beyond life companies to licensees and advisers, according to Mr Mu. Citing product innovation as an example, he noted that “…we’re talking about an environment where the left hand and the right hand need each other – where advisers and insurers need to work together to serve the Australian community to obtain appropriate protection for them and their families. We can innovate with product, but if we don’t have advice partners who will take that product forward it will sit on the shelf and it will simply become one of those ‘It was a nice idea at the time’ initiatives that goes nowhere.’ So this is where we do need to work in partnership with licensees and advisers”
These comments by Mr Mu were made at a special ‘Trowbridge’ industry round table event, following the release of the Trowbridge Final Report. As well as Mr Mu, the round table was attended by FSC CEO, Sally Loane, together with key licensee and adviser risk specialist voices from around the country. The full report will be available for all advisers as a feature in the next edition of riskinfo eMagazine, due out shortly…
Excellent insights.
Planners instead of whinging about Trowbridge report do something about it.
Boycott companies that mandate Trowbridge reforms when it does not to be implemented at this time. Do not write or place business with companies whom mandate Trowbridge report and put with providers whom have not mandated Trowbridge report. If planners do not do this and stick together the providers will see there are no consequences and will implement as there are no financial consequences to them. If you do not act your business with a focus on risk only practices will be consigned to the unemployment scrap heap. It is not to late! There is still time. It is not to late The stakes are very high.do not risk you and your families future. Join together and fight back. Remember united we stand divided we will fall. What will you choose?
You really want to hang on to your 120% upfronts don’t you Bob?
Damien is correct in saying that having innovative products will not help anyone if the advisers cannot afford to promote the products.
By trying to appease all and sundry,never has and never will work, The one certainty is, if adviser practices lose money selling Insurance, or the margin is so low that it is not worth the time and expense, let alone the new education regime being laid down that will further impact on our limited time and reducing incomes, then advisers will cease selling Insurance.
I have met with other experianced practitioners and most of them have said they will cease selling Insurance and focus on other areas, which will spell the death knell for retail Life Insurance and quality advice, with a victory for Industry Super funds and direct product floggers who do not provide advice and are a disaster to all Australians.
Don’t believe me, look at the statistics now with Law firms jumping in and costing the Life Companies hundreds of millions in litigation costs, due to their inferior policy and administration processes and lack of transparency in the group life and Industry Super area, that Lawyers love and will continue to exploit like a pack of vultures squabbling over a carcase, which will be profitable to the lawyers and a further drain to Life Companies.
We have been telling the Life Companies for years that this would be the outcome, when they allow disgraceful behaviour on one hand and encourage more and more onerous red tape against the advisers who actually do the job properly.
Good comments Jeremy and yes, the life companies do have some work to do in their own back yard when it comes to the “direct” selling markets.
Well said Mr Mu. The changes that have been “forced” upon our Industry over my 35 years as an Adviser just made us experts in Changing the way we went about running our Practices. If all “parties” to this next round of changes adopted a progressive and mutually beneficial approach I believe the over- emotional arguments, both for and against, would subside and the Financial Services Industry can get on with the job of providing financial security and peace-of-mind to the Australian consumer.
This is a good article with a much needed message. I’ve spoken to Damien a number of times and I believe he is genuine in his support of advisers and in working towards a sustainable future for all parties.
Trowbridge has simply ignored well-considered adviser and other industry submissions (and the interests of actual consumers in the process) by rolling over 100% to the stance of so-called “consumer groups” (whoever they are). These external, professional opinion-generators blow on in with no more grasp of the reality of our industry than Trowbridge himself and apparently “won’t cop” anything less than level commission.
As with Industry Super, the agenda of these “consumer groups” has long ago diverged from the needs of real consumers to now simply reflect an anti-advice agenda. A reduction in take-up of insurance is the inevitable outcome which will, in turn, result in catastrophic outcomes for joe public.
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