{"id":30714,"date":"2015-09-01T22:11:57","date_gmt":"2015-09-01T12:11:57","guid":{"rendered":"https:\/\/riskinfo.com.au\/news\/?p=30714"},"modified":"2015-09-01T22:11:57","modified_gmt":"2015-09-01T12:11:57","slug":"clawbacks-unfair-but-where-to-from-here","status":"publish","type":"post","link":"https:\/\/riskinfo.com.au\/news\/2015\/09\/01\/clawbacks-unfair-but-where-to-from-here\/","title":{"rendered":"Clawbacks Unfair – But Where to From Here?"},"content":{"rendered":"
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My primary concern with the clawback provisions in the proposed Life Insurance Framework is...<\/strong><\/div>
    \n\t\t
  • Unfairness - clawbacks will apply, even if cancelling or moving the policy inside 3 years is in my client's best interests (60%)<\/small>
    <\/div><\/li>\n\t\t
  • Uncertainty - to my business, caused by the extended 3-year period during which my income coud be clawed back (23%)<\/small>
    <\/div><\/li>\n\t\t
  • Unsustainability - my current business could only sustain a 1-year clawback period (11%)<\/small>
    <\/div><\/li>\n\t\t
  • Unsustainability - my current business could only sustain a 2-year clawback period (2%)<\/small>
    <\/div><\/li>\n\t\t
  • Other concerns (2%)<\/small>
    <\/div><\/li>\n\t\t
  • Not sure (2%)<\/small>
    <\/div><\/li>\n\t\t<\/ul>
    <\/div><\/div>\n\t\t\n<\/div>\n\n

    Above all else, advisers have agreed the clawback provisions within the new Life Insurance Framework proposals represent an unfair imposition on their business.<\/p>\n

    Results from our latest poll show that, of the issues expressed by advisers in opposition to the proposed clawback provisions, 61 per cent rate its unfairness above the other main objections, which relate to the uncertainty to a business that a three-year clawback regime may generate (22 per cent) and the potential unsustainability going forward for a number of advice practices (14 per cent).<\/p>\n

    In noting this poll is not about whether advisers support or reject the clawback provisions, but rather where the main objections to them lie, one of the next questions is what should be done about it?<\/p>\n

    The unfairness of the proposed clawback provisions is being openly acknowledged by the AFA in its National Life Insurance Roadshow. AFA CEO Brad Fox<\/strong>, together with other speakers at the Roadshow, has been flagging further discussions about elements of the clawbacks, as well as strategies advisers might use to compensate for it. For example, there is a focus on securing commitment from the life companies that there will be no premium increases during the first three years of the policy. This addresses points raised by advisers responding to this poll:<\/p>\n

    The issue with a 3 year clawback is still the uncertainty of customers cancelling due to affordability and the excessive premium rises by insurance companies.<\/em><\/p>\n

    If a three year clawback period is enforced then, at the very least, a 3 year guarantee that no premium increases will occur in that time should be mandatory for that client.<\/em><\/p>\n

    In addition to addressing the conditions that will apply to the three-year clawback provisions, advisers are also being encouraged to develop strategies to cope with this change. Commenting for riskinfo on the outcome of this poll, organisational psychologist, David Peake<\/strong>, who is also a keynote speaker in the AFA’s Life Insurance Roadshow, made the following observations:<\/p>\n

    …we need to focus on the things within our control and not outside of our control<\/h6>\n

    “If something is unfair, it’s important to acknowledge it’s unfair, but also acknowledge that we need to focus on the things within our control and not outside of our control. Be solution focused not problem focused.”<\/p>\n

    Mr Peake continued, “Even though it’s seen as unfair, advisers can move forward if they can understand what steps they need to take to cover the situation. Aussies crave structure and process, so its important they see a \u2018bridge to the future\u2019 that outlines all the steps involved to counter the potential impact of a three-year clawback arrangement.<\/p>\n

    “Clawbacks will be less of an issue when the relationship with the client is sound, and the value proposition is well communicated to the client,” he added.<\/p>\n

    This last point was also taken up by life industry legend, Russell Collins<\/strong>, who told his Roadshow audience in his video presentation that the right client engagement strategy will minimise lapses and the associated commission clawback. By creating the right engagement model with clients, Mr Collins believes advisers will achieve an outcome in which they will focus on, and be proud of, their persistency rates, rather than worrying about their lapse rates.<\/p>\n

    The unfairness inherent in a three-year clawback rule is therefore being addressed by further discussion relating to the circumstances under which the clawbacks will apply, as well as by the industry offering advisers a range of different approaches under which the impact of the clawback provisions can be mimimised.<\/p>\n

     <\/p>\n","protected":false},"excerpt":{"rendered":"

    Above all else, advisers have agreed the clawback provisions within the new Life Insurance Framework proposals represent an unfair imposition on their business.<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[8,49,270],"tags":[],"class_list":["post-30714","post","type-post","status-publish","format-standard","category-compliance-regulation","category-polls","category-remuneration"],"_links":{"self":[{"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/posts\/30714","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=30714"}],"version-history":[{"count":0,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/posts\/30714\/revisions"}],"wp:attachment":[{"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/media?parent=30714"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/categories?post=30714"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/tags?post=30714"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}