Life insurers urge pre-election green light on advice
The Government needs to deliver on the second tranche of the Delivering Better Financial Outcomes package before the next Federal Election, according to the Council of Australian Life Insurers (CALI).
Pointing to independent research confirming the financial advice needs of Australians are not currently being met, CALI chief executive, Christine Cupitt said that without the DBFO reforms, millions of Australians and their families would be left in financial limbo.
Citing independent research commissioned by her organisation, Cupitt said it highlighted that more than 40% of Australians want advice that’s more personalised and helps them make a decision about how much cover they need and the products that are best suited to them.
“Under proposed reforms, this is the kind of advice life insurers would be able to give their customers about their own products when they ask for it, and at no extra cost to the customer,” her statement said
“Australians have made it clear. They want these changes, and they want them now more than ever.”
“People need someone to talk to about their financial future. They’re already dealing with sustained cost of living pressures, we shouldn’t be turning our backs on them as they try to take care of their loved ones.”
Cupitt pointed out that under current laws, Australia’s life insurers are unable to legally provide customers with simple advice when they ask for it. Instead, they’re restricted to providing advice that is general in nature only, which in many cases isn’t what the customer has asked for.
“Less than a quarter of people say they want basic or general information only, proving how critical financial advice reforms are to giving Australians the kind of advice they want, when and where they want it.”
“We have an advice accessibility crisis in this country. It’s leaving too many people underinsured and unprotected because they can’t afford to get the right advice about the best cover for them.
The barriers to getting advice remain far too high. Australia’s life insurers just want to be able to provide simple advice on their own products when people ask them to, at no extra cost to the customer.”
“In the past three months alone, more than a quarter of Australians considered getting financial advice about life insurance but just 5 per cent actually got it,” Cupitt said.
Poor CALI and their product flog via BackPackers dream.
How about support Real Advisers with a 70% reduction in BS Govt Red Tape compliance. Then people can get real Advice on Life Ins.
So why do we have an ‘advice accessibility crisis’? Well it all goes back to the lies and greed of the life insurance companies…
… and now they want to deliver conflicted advice directly to the vulnerable public?
The advice crisis could be solved overnight:
1. Scrap SOA’s and ROA’s, which aren’t required by any other profession. Advice based on adviser judgement, with the only records required, to be a life insurance needs analysis and quote (including commissions) to be signed by the clients.
2. Amend Code of Ethics so it is sensible and allows us to deliver advice in line with point 1.
3. Revert commissions and claw backs to pre-LIF conditions.
4. Scrap the AFSL regime and replace with individual registration.
These simple measures would provide a massive boost to the accessibility of financial advice. Our numbers would go through the roof, the cost would be slashed and consumers would be substantially better off. Its not rocket science. The solutions are very simple.
@ Nuffyland,
You can’t get rid of SOA’s for Risk insurance.
If you want to recommend risk insurance in any form, you need to have a reasonable basis for doing so.
Just furnishing a quote leaves both the client and those who wish to take advantage of the situation by less than ethical advisers, is the obvious problem.
Unfortunately, opportunism is still prevalent in the industry, otherwise the plethora of legislation that has permeated over the last 24 years would have stopped the unscrupulous from even taking advantage of clients.
The problem that you have alluded to is, the real impact of the LIF legislation that has benefited no one, the release of inferior IP contracts that provide very few benefits to the client and therefore to the adviser.
The lack of integrity is the issue because of the potential inconsistency of life premiums being reasonably stable due to a lack of competition. Why, because there are far fewer players now offering risk insurance than there used to be.
By default, a “me too mentality” has resulted in a lack of product innovation which is the preferred option for life companies to minimise their risk exposure, but happy to raise premiums and make the process of buying and selling risk insurance less than conducive for those that are involved in the process.
You could just keep the research on file which justifies the switch of product. Something like an xplan comparison report and the advisers own notes in relation to the clients insurance goals would be enough. 95% of the SoA is useless and professional judgement should be used more, after all that is why we have to jump through so many hoops to be qualified. If unscrupulous advice is a concern, with a much more simple advice process, more advice files should be able to be audited quickly, plus data from insurers could identify regular switching (which I doubt is a problem these days). The way I see it, you either make compliance easier and more efficient and keep comms as they are or you keep the current compliance regime and increase comms to account for it. A the moment High compliance and low comms does not work.
The CALI cartel once again show their hand as self-serving price gougers looking to rip off the consumer
The insurers can’t even turn around an amendment quote in 4 weeks so how the hell are they going to give advice
What we need is for all Australians to have tax deductible premiums on all forms of life insurance. This will go a hell of long way to help with the cost, plus bridge the massive under insurance gap that needs to be addressed seriously.