Future of Risk Commissions in the Balance – Advisers


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…


  1. I would have chosen “The Labour government will change to level commissions only” as I see that as the most likely outcome. This is going by current polls and that Labour may feel the need to make major changes without damaging an entire industry and not just advisers.

  2. Without serious Life company intervention (which means standing up for themselves and those who provide their inflows), the industry as a whole is in serious trouble. New business will plummet even further & as dedicated advisers leave the industry, the retention of healthy clients will fall, leaving pools of claims waiting to happen without the premium inflows to support them. I just hope the general business sector notes those responsible for the failure and makes sure they don’t get the chance to buggar something else up in the future.

    • Totally agree Guy. We’ve seen Life companies begin to throw their support behind commissions as reported in recent editions of Risk Info. But as you say, there needs to be serious Life company intervention. I am going to repeat my comments from previous editions of Risk Info – the Life Companies, AFA (forget the FPA, their support for advisers has been appalling), the UFAA, dealer groups – all need to go to the government collectively and fight hard for the following – reinstate commissions at least to the 80/20 level, rid the industry of this evil 2 year clawback, and do away with this FASEA imposition of a degree. The longer this is left, the longer the recovery period. As I see it, there are two extremes – one is the reinstatement of commissions, ridding the industry of the 2 year clawback and doing away with this degree requirement. The other extreme is the destruction of the Retail Life industry. There is no middle ground!

  3. I believe advisers are generally gloomy because we were royally shafted by Trowbridge – the statistics were academically flawed yet it was the cornerstone of LIF. If that can happen once – it can happen again.

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