{"id":30120,"date":"2015-07-07T16:32:13","date_gmt":"2015-07-07T06:32:13","guid":{"rendered":"https:\/\/riskinfo.com.au\/news\/?p=30120"},"modified":"2015-07-08T07:18:46","modified_gmt":"2015-07-07T21:18:46","slug":"new-life-insurance-framework-the-path-not-taken","status":"publish","type":"post","link":"https:\/\/riskinfo.com.au\/news\/2015\/07\/07\/new-life-insurance-framework-the-path-not-taken\/","title":{"rendered":"New Life Insurance Framework – The Path Not Taken"},"content":{"rendered":"

Over 150 participants, mostly AFA members, tuned into a Life Insurance Framework webinar debriefing session last week, hosted by AFA President Deborah Kent<\/strong> and CEO Brad Fox<\/strong>.<\/p>\n

<\/p>\n

\"AFA<\/a>
AFA President, Deborah Kent<\/figcaption><\/figure>\n

Ms Kent and Mr Fox jointly covered all aspects of the proposed changes, and also provided their members with a background as to how the AFA and the industry had arrived at this point.<\/p>\n

Advisers were left in no doubt as to what their future remuneration options could have been, had the AFA not become involved in industry discussions following the release of ASIC\u2019s Review of Retail Life Insurance Advice in October 2014 (Report 413).<\/p>\n

Whilst Ms Kent said that Report 413 was effectively an industry \u2018game-changer’, she noted that the David Murray-led Financial System Inquiry report also played a highly significant role in the debate suggesting level commissions.<\/p>\n

…if the industry did not develop a solution to the issues raised in ASIC Report 413, the Government would intervene<\/h6>\n

While debate still continues about the nature of the findings in Report 413, Ms Kent said that the Report, together with FSI Recommendation 24 (see: Ban Upfront Commissions \u2013 FSI<\/a>) was the catalyst for creating a hardened political stance in Canberra that adviser remuneration for life insurance advice, including so called churning practices, must be addressed. The message to the industry from Canberra was a clear one, according to Ms Kent, namely that if the industry did not develop a solution to the issues raised in ASIC Report 413, the Government would intervene.<\/p>\n

Ms Kent told riskinfo that had the AFA not become involved in the Life Insurance and Advice Working Group, which became the base used by John Trowbridge<\/strong> to develop his Reform Model, there would not have been any adviser \u2018voice\u2019 or representation at the negotiating table.<\/p>\n

\u201cWhile Trowbridge was not where we wanted to land,\u201d said Ms Kent, \u201c\u2026it provided a point from which we could start negotiating to get a better outcome for our members and for all advisers.\u201d She added that following the release of the Trowbridge Report, the FPA came on-board with the AFA to work with the Financial Services Council in developing the consensus model that is the New Life Insurance Framework.<\/p>\n

Trowbridge was …a point from which we could start negotiating to get a better outcome for our members<\/h6>\n

\u201cWith the FPA entering the debate and ultimately agreeing to a shared blueprint with the AFA, this was critical to creating a united advice voice on the issue,\u201d said Ms Kent.<\/p>\n

In developing the Life Insurance Framework, Ms Kent noted the AFA consulted with the FSC, consumer group representatives and other stakeholders, including legal firms who specialise in client advocacy. She said that some of the consumer representatives advocated nil commissions going forward, alongside the level commission stance advocated within the David Murray-led Financial System Inquiry recommendations.<\/p>\n

Conceding more work was needed in fine-tuning the proposed clawback provisions, Ms Kent pointed out the proposed 60\/20 hybrid model was exclusive of GST (ie the model is actually 66\/22) and is not capped in terms of premium size, as had been documented in the interim arrangements proposed under the Trowbridge Reform model.<\/p>\n

\u201cWe also understand clawback is a major problem for advisers and appreciate these are very valid concerns. We’re continuing to address this issue,\u201d she said.<\/p>\n

While adviser remuneration and clawback provisions remain critical elements in the New Life Insurance Framework, Ms Kent also called on the industry, particularly the regulators and life companies, to work to ensure the costs to the adviser of providing life insurance advice reduce significantly over time.<\/p>\n

Ms Kent remains a passionate advocate for the delivery of advised life insurance to Australian consumers, pointing to their value at claim time, in particular: \u201cThere\u2019s not one adviser I’ve spoken to who has not had to fight for their clients, at some point, to get a good claim outcome,\u201d she said. She added that the Internet will not replace advisers, but they must work hard to establish their own \u2018uniqueness\u2019, in order to create a compelling reason as to why their clients should remain clients.<\/p>\n

Continuing her message to advisers, she said \u201cYour future is bright. It’s not \u2018doom and gloom\u2019.\u201d<\/p>\n

Ms Kent said she expected the Government to address the New Life Insurance Framework within its broader response to the Financial System Inquiry, expected to be released in the next few months.<\/p>\n","protected":false},"excerpt":{"rendered":"

Over 150 participants, mostly AFA members, tuned into a Life Insurance Framework webinar debriefing session last week, hosted by AFA President Deborah Kent and CEO Brad Fox.<\/p>\n","protected":false},"author":3,"featured_media":30191,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[282,8,270],"tags":[4247],"class_list":["post-30120","post","type-post","status-publish","format-standard","has-post-thumbnail","category-associations","category-compliance-regulation","category-remuneration","tag-feature"],"_links":{"self":[{"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/posts\/30120","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/comments?post=30120"}],"version-history":[{"count":0,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/posts\/30120\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/media\/30191"}],"wp:attachment":[{"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/media?parent=30120"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/categories?post=30120"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/tags?post=30120"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}