Access to financial advice, and the number of advisers able to provide it, must be addressed if Australia’s life insurance industry is to remain sustainable, participants heard at the Zurich Sustainability Round Table.
Lifespan CEO Eugene Ardino argued that reduced new business volumes are a central structural issue, adding that the fall in new life insurance sales coincided with the introduction of the Life Insurance Framework – which he claims has had a detrimental effect on insurance pools.
“What I’m seeing at a licensee level is those who are actually buying insurance, they’re older, their premiums are higher,” he said. “Those that are no longer getting insurance through advisers are younger people…because it’s not commercial for an adviser to help them.”
The result …is a pool skewed towards older people with a higher likelihood of claim
The result, said Ardino, is a pool skewed towards older people with a higher likelihood of claim.
He also expressed concern about regulatory intervention that removes product options, citing the withdrawal of agreed-value income protection policies at the behest of the regulator (see: APRA Sets New Course for IP Sustainability).
“It’s really disappointing when a regulator has to step in and basically take a product option away from consumers,” he said. “Such steps should be a last resort.”
CALI’a GM Corporate Affairs, Keely O’Brien, supported Ardino’s position noting that, while access to advice is critical for Australian’s to get the life insurance protection they need, “…the settings aren’t right”.
O’Brien said CALI is advocating for advice reform to make it easier for advisers to provide advice, while also introducing a new class of advisers. She said insurers should be able to play a role in providing advice on their own products and services.
Ardino’s observations followed remarks from Sydney-based adviser, Kristen Agius (Perera Crowther), who supported the potential for TPD benefit payments to be staged instead of paid as an upfront lump sum, provided policy pricing appropriately reflects any reduced benefit. This comment was made within the context of finding answers to address the explosion of mental health-related TPD claims being experienced by all insurers.
…gaining adviser traction remains difficult when more comprehensive traditional TPD definitions are still available
Zurich’s Head of Retail, Tim Kane, told the panel insurers have begun responding through new product development, with two new TPD offerings launched into the market in the past 12 months. However, he acknowledged that gaining adviser traction remains difficult when more comprehensive traditional TPD definitions are still available.
He suggested disability cover may need to be viewed as a broader ecosystem, incorporating income protection, occupation-based TPD and newer support benefits, particularly in cases where mental health conditions may not meet strict TPD definition.
One challenge potentially facing the sector, then, rests with where best to direct resources and effort when it comes to industry sustainability. Clearly, however, it seems product reform and greater adviser numbers are both critical factors that will form a part of the solution to the current dilemma.
Part 3 of the Zurich Sustainability Round Table, to be released shortly, continues this conversation.
Not exactly surprising news about insufficient Advisers, we had been warning about what has happened, more than 10 years ago and there was deafening silence.
What has been obvious is the complete and utter incompetence from many entities involved in the LIF fiasco and even today, NOT ONE participant has come up with a solution that will solve this, yet the solution was found in RISKINFO from Advisers with decades of experience, surprise, surprise, more than 10 years ago and as par for the course, they were ignored.
That solution is still in plain sight, when will Australia wake up and demand common sense to be part of any Government intervention.
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