What is the most likely outcome following ASIC's 2021 review of the impact of the Life Insurance Framework reforms?
- The Labor Government will ban life insurance commissions (47%)
- The Coalition Government will agree to retain life insurance commissions at the then level of 60/20 (23%)
- The Labor Government will agree to retain life insurance commissions (17%)
- The Coalition Government will mandate level commissions only (12%)
Advisers hold a gloomy outlook on the future of risk commissions if the results of our latest poll are indicative.
As we go to press, firstly, most advisers (59%) think Labor will win the soon-to-be-announced Federal Election.
Secondly, most of those predicting a Labor win think it will ban life insurance commissions once ASIC has handed down its 2021 review of the impact of the Life Insurance Framework reforms (38%), while only 21 percent think a Labor Government will agree to retain risk commissions.
Of the 41 percent of poll respondents effectively tipping a Coalition election victory, most think the LIF remuneration package of 60/20 will be retained (27%), while 14 percent envisage the Coalition mandating a level commission future for advisers.
These results come in the midst of a series of statements coming from life companies and other industry stakeholders in support of continuing risk commissions.
…consumers will be significantly worse off if risk commissions were banned
Generally-speaking, institutional and other stakeholder support for risk commissions argues that consumers will be significantly worse off if risk commissions were banned, because this would lead to the demise of retail life insurance advice businesses.
It’s argued that the demise of risk advisers would in turn add a further financial burden on any Government in having to support a larger proportion of the population who would be forced to rely on Government pensions and social security payments because they were not prepared to pay a fee for risk advice and did not hold adequate or appropriate insurance cover for their circumstances.
Anecdotally, this is a very broadly-held argument and yet the prevailing opinion in our poll is one that sees a bleak future for risk commissions and – by implication – for risk focused advisers and advice businesses.
do you think calm heads will prevail…?
When it comes to the crunch after ASIC’s 2021 report is handed down, do you think calm heads will prevail – that is – do you think risk commissions will get a reprieve? Or do you think the writing is already on the wall?
As always, we welcome your input as this critical debate continues over an issue whose outcome is far from certain…