Wayne Handley (left) and Don Trapnell

Hampered by a reduced distribution network, challenged insurer Integrity Life will cease writing new policies through its adviser and corporate group insurance channels.

Integrity Life CEO Sean McCormack has declined interview requests, but a public statement to the press referred to the declining risk market and loss of adviser distribution network.

It referred to the Life Insurance Framework reforms legislated in 2017, which capped adviser commissions (60 per cent up front for the first year and 20 per cent ongoing), as well as the higher professional and ethical standards regime that made the retail advised channel difficult.

“I’m incredibly sad for the entire Integrity team and our many partners who have supported us, especially in recent years,” McCormack said.

“This is not the news we’d hoped to share however the significant challenges of the Australian life market coupled with the realities of growing a business from the ground up mean that it is necessary.”

The changes for the corporate group channel will take place immediately, while the retail advised channel will take effect on 29 September.

The company is expected to continue running its existing book of policyholders, but industry sources are anticipating the business could come up for sale. Integrity Life was approached for comment on the speculation.

“Achieving scale requires significant ongoing investment, and we have reached a point where it is not in either the policyholder or shareholder interests to continue to write new retail advised policies,” McCormack said.

“Given the challenges with retail advised, we have also taken the decision to cease quoting for new corporate group insurance business, to maintain our capital for the benefit and protection of existing policyholders,” McCormack said.

Backwater to business

Life insurance advice industry stalwart Don Trapnell, Llenpart Financial principal and former Synchron chair, tells Professional Planner what happened to Integrity Life is endemic to what happened to the life insurance industry in Australia.

“We’re losing advisers, if we lose advisers we lose distribution, if we lose distribution we lose turnover,” Trapnell says.

Integrity Life started in 2019 while McCormack joined in March 2021 after nine months after a 14-year tenure at MLC Life where he was most recently chief of life insurance.

“When Sean McCormack came in [to Integrity] he did a great job of turning that company around but unfortunately they brought him in too late and the world just overtook them,” Trapnell says.