Australian Advice Network CEO, Paul Forbes, takes aim at the product manufacturers and ASIC in this article, as he sheds some light on key issues that are having an impact on the ability of advisers and advice businesses to efficiently write new life insurance business.

While he acknowledges the impact of the Life Insurance Framework remuneration reforms on new business levels, Paul takes us on a journey that tracks the progress of one life insurance application. In highlighting the numerous roadblocks and friction points he and his team experience on this journey to place a single life insurance policy on the books, Paul is calling on the product manufacturers to do more.

His message to the FSC and to all life companies is that they need to look to themselves and to reflect on their own processes and procedures when reflecting on why adviser numbers and risk new business sales are both in decline…

Why have new life risk sales actually dropped?

We have three practices within our licence that have all historically placed large amounts of new life risk business. Over the last three years (and well before Covid-19), they have been reducing their life businesses.

… the administration of life companies has pushed the cost of on-boarding new life risk clients to extremes

Yes, the LIF Framework has made dealing with smaller clients uneconomical but the administration of life companies has pushed the cost of on-boarding new life risk clients to extremes. The ongoing management costs are also increasing exponentially. Add increased responsibility periods with no restraint placed on life companies increasing premiums by between 15% and 20% annually, and as a practice or licensee, you start to see more management risk than value.

The journey begins…

The problems start from the moment you speak to a client. Yes, they have a risk that needs to be covered and they would like to remove this concern.

First, you need to get an authority to look at their current insurances. One of our practices recently wrote to one insurer who advised their turnaround around times for these sorts of requests was 25 – 30 working days – just so that we can ring and ask questions about the client’s existing insurances. They can then provide a quote for new insurances but that is taking anything up to five working days. And good luck if you want a quote to reduce existing insurances, which can easily take 10-15 working days.

Next steps

Of course, at the practice level, we have already organised a meeting, spent time with the client, agreed to work with them, provided an FSG, signed a letter of engagement, and collected AML documents.

We have then taken another meeting to complete a client data form and risk profile and of course, each meeting has a plethora of file notes. If it is a small business, we will need financials, copies of trust deeds and shareholder agreements. All this information is added to the practice’s expensive financial advice and CRM system.

We contact the client each week to advise them we are still waiting on their current insurers to process the client’s signed authority for us to source information on their behalf.

Four-to-six weeks later we finally have that authority and, after sitting on their ‘priority’ access for twenty minutes, we can ask the provider for information.

We should finally be able to prepare an SoA with some recommendations, but we are now waiting for quotes.

Each week as we wait, we send notes to the client saying we are waiting for pricing.

Some six-to eight-weeks after the client’s second appointment we can then start completing an SoA. Of course, we now have to go through underwriting.

The process continues

Tele underwriting is safest for the adviser, the practice and the licensee and this is another appointment to be scheduled by the practice and the life company. The tele-underwriters are good, so no complaints. But not surprisingly, the client needs tests and/or medical reports. This is then organised by the insurance provider, generally through a third party – UHG, for example. Then they follow up the client’s doctor who unfortunately, in most cases, sees responding to these insurance queries as a low priority.

Some weeks later, the underwriters request additional information and we diligently complete questionnaires or hound the client to go and have additional tests.

The medical data has finally arrived. We are about 10-12 weeks into the process now and we either need to advise the client of revised terms or, and not unusually, the life company has declined the risk.

If it is new terms, we arrange another appointment to discuss the revised terms and whether the client believes this new premium is worthwhile.

The client decides it is too expensive and asks for a new quote with lower insurances. We wait for quotes again.

Two things can happen from there:

  1. The client has lost interest and decides they will self-insure.
    • Guess who pays for all that effort to this point. After four months of work, the adviser and practice have spent 50-60 hours chasing down information. They may charge an ‘advice’ fee of $2,200, but the client is not happy about paying it. In real terms the cost has been between $5,000-$6,000 to create an unhappy client.
  2. The client agrees to the new terms, the applications forms are completed, the life company takes another two weeks to process and finally the client has their insurances in place. We advise the client, finalise file notes, complete all the back-end procedures and tick the file as complete.

But wait – there’s more

Our licensee then decides to audit the file, reviewing all notes, AML, product comparisons, advice documents, client data form, insurance needs analysis and disclosures. Because the practice has done a good job, they are fine, but they pay another $550 for that privilege of an audit report, not forgetting the time it takes to prepare the file and respond to queries.

12 months later the life company increases their premiums by 15% (excluding CPI as we have removed that) and the client isn’t happy and wants their insurances reviewed.

We start the whole process again or they lapse the policy and the adviser, practice and licensee receive a clawback.

… the life companies are adding almost two months of time due to their own administrative inefficiencies

In this process we believe the life companies are adding almost two months of time due to their own administrative inefficiencies and lack of investment in data management.

Where to from here?

Yes, we should look to simplify the advice process and there are smarter ways to get applications up and running, but fundamentally life companies and the FSC need to look internally first and clean up their own back yard. For example:

  • Make available streamlined products that exclude overcomplicated benefit schedules
  • Offer lower-priced trauma/critical illness products that covers less risks
  • Offer income protection policy options that deliver fewer bells and whistles

One could argue that part of the reason why the industry is going backwards at the moment is because ASIC is mostly listening to companies that are not in the advice business – they are in the product business. Why isn’t ASIC listening to advisers?


Paul Forbes is the chief executive of Australian Advice Network (AAN). AAN won IFA’s Best New Licensee in 2016 and Paul was awarded IFA’s Dealer Group Executive of the Year in 2018.

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  1. Great article Paul. As a risk specialist for 22 years, I can totally relate to all you have said. RiskInfo reported on Wednesday the results of their survey on whether advisers support Trowbridge’s second round of adviser remuneration suggestions. Those who read the article know that over 70% of advisers reject his proposal. The point is that the article also highlighted that advisers are just not being heard. You’ve reiterated that as well.

  2. Refreshing and on the money thanks Paul. I’m in my 30th year of advising in risk and feel I’m only just beginning as the landscape continues to move, the challenges are ever increasing, namely increasing cost to do business, ever increasing compliance demands, putting out daily spot fires caused by insurers and don’t forget the unrealistic education requirements placed on risk specialists. Strangely with all these challenges placed upon us I’m still committed to the cause because I enjoy what I do and like helping people. My greatest concern is the sustainability of the risk industry with a decreasing premium pool, rising claims and declining advisers numbers, a recipe for implosion, we can only hope a more pragmatic approach prevails soon. The good news is the blame game has now begun through Trowbridge which is recognition there’s a problem.

  3. Brilliant synopsis Paul. Could not agree more. It would be good if there were better instruments of positive change than cutting the benefits out of contracts, unfortunately that is the trajectory risk advice is on. In my opinion its an absolute disgrace that reforms, which were supposed to make advice more accessible, and products more sustainable are having the exact opposite effect. One could argue that the need for insurance advice and quality cover is more acute than at any other point in our nations history, and yet the number of experienced risk advisers is dwindling and the risk products the public to rely upon to cover them are becoming less and less comprehensive – what a result. Words fail me.

  4. Paul is an experienced Practitioner and has articulated very well the frustration and disconnect that Advisers feel when trying to get the Life Companies to understand the issues.

    There is a missing piece to the puzzle of fixing the issues that has plagued the Industry for years and the solution has always been experienced advice Practitioners, though for as long as I have been advising and running our Business, ( 33 years ) there has been a reluctance by Life Companies, Regulators and Government to recognise that the successful practitioners who work in this field at the coal face, may actually know what they are talking about and to heed their advice.

    Instead, what we have is a world of theorists with no practical knowledge or experience, who have a one dimensional, Utopian view of how things should be and what we end up with is the disaster the Retail Life Insurance Industry faces today.

    This is not unique to our Industry. It is a disease that most Business faces today across the entire Australian economy, where armies of Public servants, self Interest lobbyists, Lawyers and left wing loonies have taken control of our lives and are strangling any opportunity to create a viable and competitive future, based on sensible reform and regulations.

  5. A realistic case too. Agree 100% with the point about inefficiences. Internal staff have no idea about what it is like to be an adviser. They wait for an app to come in and if it’s close to quitting for the day or lunchtime they will let it go to until after that or even the next day. Not all do of course, but from where we sit it often SEEMS like that!

    The time it takes for an application to be completed is longer than I can ever remember and yet for years now we’ve had electronic submissions. Paul detailed it well and it really is tragic for our industry that it’s been, not just allowed but orchestrated, by those who run it.

  6. Paul, are you sure you have not had a secret camera planted in my office??!! This description of trying to get insurance through the current system is spot on. It is getting harder and harder to get cases through underwriting at standard rates, although some insurers are certainly better than others in that regard. I dread when a doctor report is requested as it is a minimum of an extra 4 weeks.Then today I was contacted by a BDM to tell me that they are cranking their IP up by 25% for stepped and level premiums next month so claw backs come into play now. What fun and games it is.

  7. Hi Paul…you ask why ASIC isn’t listening to Advisers…because they [think] we are all crooks and subsequently have legislated to create an environment of shoot and ask question later. In other words Advisers are operating in an environment where we are all presumed guilty until we can prove our innocence. Add to that Labour’s efforts to continue to appease industry fund and unions and we are pushing boulders up a very steep hill

  8. The greedy insurance companies (via the FSC) pushed for LIF (60 upfront /20 trail) because they naively thought that by paying advisers less, they’d be able to keep more.

    These highly paid fools (insurance CEOs and executives) must not have paid attention during economics class when supply and demand was being taught and/or were too stubborn to listen to the multiple voices of experience.
    FSC helped the banks sell their insurance businesses at a premium (because the expense line for commissions was reduced but top line for revenues hadn’t been adjusted downwards because the effects were too soon to be seen when they were sold) and exited the industry.

    ASIC in the meantime still collected their ironclad salaries and lucrative bonuses for doing “an awesome job” while the industry they had oversight of was crumbling beneath and the public’s best interest was not being safeguarded. Because ASIC was asleep at the wheel, Hayne (a career lawyer with no clue about financial advice or mortgage broking) got the wool pulled over his eyes by the big banks so whilst it was a Royal Commission into Banking Misconduct, strayed outside his remit to recommend banning of Life Insurance commissions and Mortgage Broking commissions predicated on the Netherlands Model where in Holland new home buyers are required by law to take out personal insurance in order to get a home loan.

    The botched jobs that are LIF, the Royal Commission and FASEA have caused many good and experienced Risk Advisers who have been doing the right thing for decades to throw their hands up in frustration and walk away from the insurance advice industry. This has further exacerbated the issue by reducing the insurers’ distribution channel and this has caused APRA to jump in with their harebrained ideas without any meaningful consultation (and I suspect at the beckoning of the insurers remaining in the industry) to come up with stupid proposals, that the insurers can say “It’s not what we want, it what APRA is forcing on us and everyone” (much like what they said after LIF).

    The parallels that this sad story has to the introduction of cane toads in Australia is scary.

    The long term implications are scarier still.

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