Generating plenty of reader engagement this week was our report on last year’s drop in individual risk new business premium, and speculation on why fewer policies are being sold…
A drop in new risk business is largely down to there being fewer advisers. That’s the conclusion of Mark Kachor, MD of research firm DEXX&R.
Figures just published by the company show total individual risk new business premium dropped 16.3% in the 12 months to September 2024 to $1.16bn.
The firm also reports that total risk in-force premium dropped 1.2% in the 12 months to September, down from $16.5bn in the previous corresponding period to $16.3bn.
Lump sum new business premium was down 12.9% to $820m for the 12-month period, a $79m drop on September 2023’s figure.
…We have now lost almost half the number of advisers we had five years ago…
“It is an ongoing problem the industry has,” says Kachor. “We have now lost almost half the number of advisers we had five years ago. That has hit the risk life insurers harder than it has hit wealth management.
“The demographics of those that predominantly wrote life insurance were older advisers.
“I think there has been an even greater decrease in the number of people selling life insurance, and the inevitable result of that is you have fewer sales. You shrink distribution, you shrink sales.”
The firm also reports that individual lump sum risk new business was down 3.9% for the September 2024 quarter. During the same period individual lump sum new premium fell 5.7% to $200m (Q3 2023 $237m).
Disability income business also experienced a drop during the 12 months to September 2024, down 23.5% to $343m on the previous corresponding period.
Disability income new business in Q3 2024 was down 21.4% to $60m from the $78m recorded in Q2 2024. September 2024 quarter sales were 52.9% lower than the $129m recorded in Q3 2023.
It's pretty simple folks !!
1 Unwind LIF to 110/10, with "clawback" back to one year. BUT retain "no volume overides" rule
OR
Make risk advice fees fully TAX DEDUCTIBLE
2 Reduce ridiculous outrageous compliance and paperwork that is bound up with anyone selling risk with PERSONAL ADVICE
3 Ban DURATION BASED PRICING on nerw business
4 Pass legislation that compels APRA to consult RISK advisers on serious product changes
Heres my bus !
Agree with all you say Oldie EXCEPT the first thing . . . ir should read 100/20. That's what will properly incentivise old advisers (are there any left?) to incentivize apprentices to start in the industry (dare we call it a profession yet with the pollies mindless interference?).
The problem always had a simple solution, the first being the purported problem was a mole hill made out to be a mountain.
The second solution was to separate risk advice from Investment advice and make it attractive again for new and existing advisers to write risk business and make it their career if that is what they wanted, or to use risk advice as a stepping stone to becoming a full Financial Planner later, with ongoing studies relating to Financial Planning.
In other words, to all you bureaucrats who are getting paid large salaries and telling everyone else to starve while struggling to attain full Financial Planning qualifications, it is an easy to understand concept of, "earn while you learn, so you can afford to live."
Even today, after years of declining Adviser numbers, virtually NIL new risk only Advisers entering the Industry, premiums for existing customers doubling to offset lapses, which only exacerbates the problem, we are still stuck in neutral heading for the cliff with ZERO common sense from our Politicians who are totally out of their depth and from some quarters, a suggestion to bring in Indian Financial Planners to offset the thousands of experienced Australian Advisers who exited due to no longer wanting to be part of the insane asylum run by the inmates, who could could re-enter tomorrow as risk advisers and solve the rapidly declining Life Insurance client base.
Also, it has been spelt out hundreds of times that Financial Planners who are qualified to do risk advice, are walking away from proactive risk advice, due to the maze that has made it all just too hard to be involved, so all they are doing is managing existing clients to try and stop them from cancelling and in turn, jeopardizing the Investment advice part of their Businesses.
The moment you open the doors to woke and theory based experts, in consultation with vested interest brigades, it is ALWAYS a slippery slope to massive decline.
The total of Jeremy's carefully considered comments above can be summed up with the unfortunate diatribe I've been delivering since 2020. That is, to wit, that risk advice will cease as we know it by end of 2026 for exactly the reasons Jeremy outlines plus some others. Commissions too low to justify the effort, 2 year responsibility period far too 'risky' to bear and lastly the compliance/paperwork not only takes all the fun, impetus and motivation from the job but also alienates the client (NOT 'customer', you philistines!) to the point where they see full engagement simply too hard. Well done you absolute idiot self-interested politicians, life company execs and industry special interest groups.
The risk industry used to rely on recruiting well connected, middle aged people who wanted to try something different that offered a decent future if they could make it. 90% didn't but a lot of people tried because it was worth a shot.
Relying on socially awkward uni grads was NEVER going to work.
Everyone knows what needs to happen except the politicians.
The only way back is if the insurers stand up for themselves and push for the required changes & the problem there is that the CEOs these days are more interested in short term results (which pay high bonuses) at the expense of long term growth & properity.
One interesting question is whether the government is going to end up needing to insure the industry because when it all falls in a heap, they'll be the last ones standing.
Good words AA. Uni Grads – God luv 'em, with their high academic credentials but little real grasp of life issues. The CEOs were happy to go along with forcing early retirement on established 'real' advisers in favour of their highly polished 'new gen' of advisers from the universities. We told them it wouldn';t work and now it is clear it hasn't and won't. Yes, those Life CEOs wanted their short term results for short term bonuses and now the piper is due to be paid as the fruit of their short-termism has come home to roost. How did they think things would end up given what they did to advisers AND the policies, especially the gutting of proper IP definitions? I'd really like to know what they thought would happen, if not this hot mess we have now!
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