{"id":30805,"date":"2015-09-08T18:38:30","date_gmt":"2015-09-08T08:38:30","guid":{"rendered":"https:\/\/riskinfo.com.au\/news\/?p=30805"},"modified":"2015-09-09T07:01:34","modified_gmt":"2015-09-08T21:01:34","slug":"latest-on-lif-clawback-exemptions","status":"publish","type":"post","link":"https:\/\/riskinfo.com.au\/news\/2015\/09\/08\/latest-on-lif-clawback-exemptions\/","title":{"rendered":"Latest on LIF Clawback Exemptions"},"content":{"rendered":"<p>Last-minute negotiations continue on the final details that will attach to the proposed clawback provisions contained within the new Life Insurance Framework.<\/p>\n<p><!--more--><\/p>\n<figure id=\"attachment_30070\" aria-describedby=\"caption-attachment-30070\" style=\"width: 150px\" class=\"wp-caption alignright\"><a href=\"https:\/\/riskinfo.com.au\/news\/files\/2015\/06\/Brad-Fox-2.jpg\"><img loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-30070\" alt=\"AFA CEO, Brad Fox is calling on insurers to act with fairness in relation to the proposed LIF clawback provisions\" src=\"https:\/\/riskinfo.com.au\/news\/files\/2015\/06\/Brad-Fox-2.jpg\" width=\"150\" height=\"180\" \/><\/a><figcaption id=\"caption-attachment-30070\" class=\"wp-caption-text\">Brad Fox is calling on insurers to act with fairness in relation to the proposed LIF clawback provisions<\/figcaption><\/figure>\n<p>Riskinfo understands the Association of Financial Advisers is seeking exemptions on a number of circumstances which may otherwise be considered as a policy lapse and therefore subject to the proposed clawback rules.<\/p>\n<p>AFA CEO, <strong>Brad Fox<\/strong>, has recently stated that a good starting point for considering what circumstances should be exempted from clawbacks within the Life Insurance Framework is ASIC&#8217;s statement in its October 2014 Review of Retail Life Insurance Advice (<a href=\"https:\/\/riskinfo.com.au\/news\/files\/2014\/10\/rep413-published-9-October-2014.pdf\" target=\"_blank\">Report 413<\/a>). Paragraph 111 in Report 413, which defines the types of lapses the regulator asked the life companies to exclude from its reporting for ASIC&#8217;s Review, states:<\/p>\n<p><em>We do not consider the following examples to be policy lapses and asked insurers to exclude these policy events from their responses:<\/em><\/p>\n<ul>\n<li><em>(a) a claim on a policy;<\/em><\/li>\n<li><em>(b) a policy ceasing due to the insured person reaching a certain age (e.g. age 65);<\/em><\/li>\n<li><em>(c) a change in ownership of a policy from individual ownership to SMSF ownership, with the same underlying insured person and risk;<\/em><\/li>\n<li><em>(d) a policy being unconditionally reinstated on payment of an outstanding premium, after non-payment has occurred for a period of time;<\/em><\/li>\n<li><em>(e) a policy owner electing to discontinue one of the benefits the policy commenced with (e.g. the original policy had life, TPD and trauma cover, but the policy owner chooses to discontinue the trauma cover, while continuing with the life and TPD cover); and<\/em><\/li>\n<li><em>(f) one person under a policy that covers multiple people ceasing to be insured, but the policy remaining in force for the other person or people.<\/em><\/li>\n<\/ul>\n<p>In addition to these exceptions, the AFA is seeking to ensure that no clawbacks should apply to policies cancelled inside three years that have experienced a premium increase outside of CPI or normal stepped premium increases.<\/p>\n<p>The AFA has also called for lapses due to financial hardship, such as the loss of employment, to be exempted.<\/p>\n<p>Mr Fox has argued that if the insurers do not have the systems in place to conduct the three year clawback on fair terms by excluding legitimate client-initiated lapses, then serious consideration should be given to shortening the responsibility period to two years: \u201cThe purpose of the three year clawback was always said to be to prevent inappropriate replacement of products by the same adviser, so its application should be restricted to those instances only. If that can\u2019t be achieved by the insurers, then they will need to consider whether the clawback period should be reduced,&#8221; said Mr Fox.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Last-minute negotiations continue on the final details that will attach to the proposed clawback provisions contained within the new Life Insurance Framework.<\/p>\n","protected":false},"author":3,"featured_media":30876,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[8],"tags":[4247],"class_list":["post-30805","post","type-post","status-publish","format-standard","has-post-thumbnail","category-compliance-regulation","tag-feature"],"_links":{"self":[{"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/posts\/30805","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=30805"}],"version-history":[{"count":0,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/posts\/30805\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/media\/30876"}],"wp:attachment":[{"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/media?parent=30805"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/categories?post=30805"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/tags?post=30805"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}