{"id":77023,"date":"2025-04-29T19:13:33","date_gmt":"2025-04-29T08:13:33","guid":{"rendered":"https:\/\/riskinfo.com.au\/news\/?p=77023"},"modified":"2025-05-05T11:50:13","modified_gmt":"2025-05-05T00:50:13","slug":"call-to-fix-the-life-insurance-burning-platform","status":"publish","type":"post","link":"https:\/\/riskinfo.com.au\/news\/2025\/04\/29\/call-to-fix-the-life-insurance-burning-platform\/","title":{"rendered":"Call to Fix the Life Insurance \u2018Burning Platform\u2019"},"content":{"rendered":"

Prominent adviser and former AFA National President, Sam Perera<\/strong>, has renewed a public call he first made ten years ago for the life insurance industry and the law makers to come together to fix the life insurance market, which he currently likens to a burning platform.<\/p>\n

Perera commenced his advocacy in 2015, when Riskinfo reported on a letter he sent to then prime minister, Tony Abbot:<\/p>\n

Adviser Letter to PM<\/a><\/p>\n

Sadly, according to Perera, many of the concerns he was raising ten years ago have been borne out:<\/p>\n

\"\"<\/a>
Former AFA National President and respected risk specialist adviser, Sam Perera …calling on industry and law makers to fix the burning platform<\/figcaption><\/figure>\n

\u201cThe life insurance market is somewhat of a burning platform due to the significant decline in new business volumes alongside a corresponding spike in claims,\u201d says Perera of the status of the life insurance sector in 2025.<\/p>\n

He adds it is \u201c\u2026vitally important that the stakeholders in the insurance industry understand that we have a duty of utmost good faith, not just in the context of drafting and interpreting insurance contracts but in how we conduct our affairs. We have a social license to operate, and our clients are trusting us to ensure that we are there at their most vulnerable times to save their families and their businesses from financial ruin.\u201d<\/p>\n

…the life insurance market is clearly broken<\/p><\/blockquote>\n

Perera argues the life insurance market is clearly broken, referencing data held by researchers and insurers suggesting that after taking into account the combined effect of lower new business sales volumes and current lapse rates that the insurance pool (net of premium increases) is shrinking rapidly.<\/p>\n

\u201cThe only tool that is seemingly being used is a very blunt one – premium increases,\u201d says Perera, adding \u201cThere are only so many increases that our clients can absorb, leaving them to reduce or cancel cover. The great risk of this strategy other than those being unable to afford insurance is that the lives that are most likely going to claim will be the ones left in the pool, resulting in further deterioration in claims experience.\u201d<\/p>\n

Aside from premium increases, argues Perera, his sense is that there is too great a focus on the proposed new class of advisers and life solutions delivered under general advice to solve today\u2019s issues. But Perera questions when the new class of adviser will become a reality, and warns general advice carries risk if not done properly (he cites Westpac v ASIC S69\/2020).<\/p>\n

…it is very difficult to see the current settings supporting any more than three or four insurers in the market<\/p><\/blockquote>\n

In a down-beat assessment of at least the near future, Perera contends it is very difficult to see the current settings supporting any more than three or four insurers in the market and warns of a risk of the life insurance market turning into an oligopoly: \u201cThere has been some spruiking recently of the fact that new business sales volumes are increasing,\u201d says Perera, \u201c\u2026however the increases are not meaningful and far from returning to the numbers that we need for a thriving market.\u201d He adds he is convinced that there will likely be another life insurer exit the market in the next three or so years unless something drastic happens.<\/p>\n

While articulating the issues, he also offers solutions. According to Perera, the following steps need to be taken to facilitate a thriving life insurance market:<\/p>\n

    \n
  • Legislate the new class of advisers to improve distribution of \u2018simple advice\u2019 for insurers and advice practices<\/li>\n
  • Legislate to eradicate Statements of Advice, as recommended by the Quality of Advice Review<\/li>\n
  • Insurers (especially those that are lacking in scale) need to be forthright with the legislators and regulators as to the burning platform they are on and the ramifications. A sense of urgency is needed to start work on solutions.<\/li>\n
  • Review the Life Insurance Framework commission caps, especially targeting a solution that will attract younger lives into the life insurance pool.<\/li>\n
  • Find sustainable settings for mental health coverage, including applying to the ACCC for relief from competition laws. Insurers can thereby work together on an industry-led solution that removes the risk of first mover disadvantage.<\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"

    Prominent adviser and former AFA National President, Sam Perera, has renewed a public call he first made ten years ago for the life insurance industry and the law makers to come together to fix the life insurance market, which he currently likens to a burning platform. Perera commenced his advocacy in 2015, when Riskinfo reported […]<\/p>\n","protected":false},"author":3,"featured_media":77026,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[8,3],"tags":[],"class_list":["post-77023","post","type-post","status-publish","format-standard","has-post-thumbnail","category-compliance-regulation","category-general"],"_links":{"self":[{"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/posts\/77023","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=77023"}],"version-history":[{"count":0,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/posts\/77023\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/media\/77026"}],"wp:attachment":[{"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/media?parent=77023"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/categories?post=77023"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/tags?post=77023"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}