Despite a few hangers-on hoping for a last-minute reprieve, risk advisers have now largely accepted the inevitability of the Life Insurance Framework’s (LIF) reforms, according to Zurich.

“There’s an overarching sentiment that, while you’ve got a small core of people who are potentially still not fully embracing of the need to change … the train has now left the station, and they want to position themselves as best they can and get a bit of certainty.

“The fact that there seems to be a reasonable degree of positivity … they’re now largely at the point where they’re looking for practical tools. That’s what we have been providing,” says Richard Dunkerley, head of marketing and communications – life and investments, Zurich Financial Services.

The life insas as being either “prepared” or “fully prepared” for the reforms. Only 12 per cent said they were entirely unprepared.

The phone survey was conducted before Assistant Treasurer Kelly O’Dwyer announced the later LIF implementation deadline, which was shifted from January 1 to July 1, 2016.

“The fact that they’ve got six extra months to prepare hopefully increases their confidence even further. And having said that, I do think that there’s a bit of sentiment that some would be happy for it to happen earlier; they just want to get on with it,” Dunkerley says.

Around 38 per cent of those surveyed highlighted efficiency gains as a key area of change for their business ahead of the LIF reforms, with 36 per cent focusing on shifting their business cost structures.

Almost one-third of respondents (27 per cent) were looking at new service offerings.

Outsourcing of activities was among some of the ways advisers would seek to add greater efficiencies.

“Insurers for a while now have been offering services like online applications, tele-underwriting and various kinds of value-add, where the insurer is taking work off the hands of advisers.

Resistance remains

“Though some have been reluctant to take up those kinds of services. There are some who don’t like technology … they’re very protective of their relationship with the client and don’t want the insurer to impinge on that, they want to manage everything themselves,” Dunkerley says.

Some respondents indicated they would add estate planning, succession planning or more business-focused services as a way of mitigating the effect of declining up-front life insurance commissions.

The fraught issues of commission clawbacks and penalising of “churners” were not addressed by the survey.

“You’re right, it’s probably the number one cause of angst. Some companies have been better at monitoring and measuring lapses and turnover of clients than others.

“Insurers are having to think about solutions that are related to that,” Dunkerley says.

Maintaining greater stability in pricing and product features were identified as key ways insurers can reduce the need for advisers to move clients between policies, according to separate feedback Zurich has received from advisers.

“One of the things you can do is try and have a bit more stability in your pricing and product enhancements in those first three years, so that you’re not creating a structural need for them to think about reassessing the policy,” Dunkerley says.

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