Do you think life insurance commissions will eventually be banned in Australia?
- No (57%)
- Yes (30%)
- Not sure (13%)
Questions stemming from the Insurance Round of the Banking Royal Commission, and the responses they have generated, has prompted our latest poll.
What may have been unimaginable to many practising advisers at the beginning of their careers is now something that might actually happen.
But, could it really happen? Could life insurance commissions actually be banned?
Industry stakeholders have been quick to jump to the defense of risk commissions, with the AFA using the most strident language in that defense, stating last week that “The banning of commissions on life insurance in Australia would be a global experiment, the likes of which have never been seen previously…” (see: Removal of Commissions Would Damage Insurance System).
The FPA and FSC have each weighed in with their own objections to the notion that risk commissions be banned, joining with the AFA in pointing out the Life Insurance Framework remuneration reforms, which have only just been implemented, have already thoroughly addressed the question of adviser remuneration.
Even ASIC has declared it won’t be touching risk commissions until at least 2021, when its review of the impact of the Life Insurance Framework reforms is due to be delivered (see: Insurance Commission Not Under Review Until 2021…).
But what might happen beyond 2021? Will momentum continue to build that will eventually see the banning of life insurance commissions? Or do you think the industry will be spared this possibility in favour of a long-term solution based around the 60/20 formula presently stipulated in the Life Insurance Framework?
We’re not asking whether you believe risk commissions should remain. We’re asking whether you think they will.
As always, let us know what you think and we’ll come back to you next week.