Sentry Group Managing Director, Murray Hills, has issued a renewed call to review the proposed Life Insurance Framework, following the appointment of Malcolm Turnbull as Australia’s new Prime Minister.
While welcoming Mr Turnbull’s appointment, Mr Hills says the new PM can expect to receive many direct approaches from advisers, dealer groups and industry stakeholders requesting that he heeds their requests to review the proposed Life Insurance Framework.
Mr Hills also confirmed that he supported one of Sentry’s advisers, Roger Smith, as the first of the dealer group’s advisers that would be writing direct to the new Prime Minister to voice his concerns.
Although he supports the need for reform, Mr Smith has singled out the three-year responsibility period as “…totally unworkable, not commercially viable and … not a recommendation from John Trowbridge who saw no reason for a change away from a one year responsibility period.
The proposed changes have quite literally rocked the foundations of the advice industry…
“The proposed changes have quite literally rocked the foundations of the advice industry,” continued Mr Smith, calling the three year responsibility period a threat to the commercial viability of adviser SMEs that provide an invaluable service to the community.
“Furthermore, the proposed reform flies in the face of the ‘client’s best interest’ as a 200% increase in the responsibility period severely limits the capacity of advisers to make changes necessary for the client as a result of the financial impost that will be forced on the adviser,” he added.
Mr Hills said that no business in any profession can survive, let alone prosper, with a three year contingent liability over the operation as he says advice practices will be required to do.
“The survival and growth of the personalised non-aligned financial advice sector and the concerns voiced by professional practitioners must be a priority for the new Prime Minister and federal government”, concluded Mr Hills.
I agree with Murray that a renewed focus on the 3 year clawback needs to be the number one priority for the AFA and FPA to address.
Retail Life Companies must be profitable and with the current disjointed processes and administration forced upon all adviser practices, it is difficult to get New Business and increases underwritten, let alone trying to cope with confusing correspondence that is not reader friendly.
Those issues can be worked on. What can be done now is to address the elephant in the room, which supposedly is CHURN.
There has not been one scrap of evidence publicly presented by any Insurance Company on this subject, which makes this a flawed argument. However this continually seems to be the mantra laid down and the solution for this supposed problem is simple.
For all New Business written by an adviser, there will be a 3 year responsibility if the policy is rewritten by that adviser.
The adviser will have a one year responsibility if the policy lapses due to circumstances that are not related to the advisers actions.
PROBLEM SOLVED. Then we can get on with writing New Business and helping the Insurance Company stay profitable.
I agree with both Jeremy and Murray. A couple of points regarding “churn” that I would like to add. As a ‘non-churning’ adviser I have probably forgone over $300,000 of income over the past few years. To date not one insurer has come forward with a recognition of the vast majority of advisers who don’t churn, let alone announce a ‘reward’ for doing the right thing, year in year out. A thank you wouldn’t be out of place. Secondly, there hasn’t been any discussion about the life insurer’s inability to build strong relationships with advisers so that ‘churn’ never existed in the first place. Marketing, underwriting, product designers, and BDM’s all have a collective responsibilty to forge strong relationships with those people ( advisers ) that bring the business to their front door. Quite frankly they haven’t done their job anywhere near to what could be described as a pass rate, and they wonder why some advisers change insurers on a regular basis. As usual it is a case of blame someone else ( advisers ) for their own shortcomings. I wonder if all those groups of people are facing a massive income reduction when this whole debacle has run it’s course. Never in a million years !
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