Zurich Australia head of adviser channel Kieran Forde and Hayes & Co director and financial adviser Katherine Hayes join Professional Planner editor Chris Dastoor to discuss the current landscape and future outlook of Australia’s life insurance advice sector.
Forde highlights that while the retail life insurance market generates approximately $9.3 billion in annual premiums, growth has been modest, primarily driven by price increases rather than new customer acquisition. Notably, only about one-third of financial advisers engage in risk advice, with a small fraction responsible for the majority of new business.
Hayes shares insights on the challenges advisers face, including navigating complex regulatory changes and the need for specialised knowledge in risk advice. The conversation underscores the importance of technological advancements and tailored training to support advisers in delivering quality risk advice.
Overall, the episode underscores the critical need for increased participation in risk advice among advisers and the adoption of innovative solutions to address underinsurance and ensure the sector’s long-term viability.
The government should just stay out of pricing (mandating upfront commissions, trail commissions and clawbacks) as well as product (Bulls**t IDIP contracts and no more Agreed Value Income Protection) and just leave pricing and product innovation to the free market forces of supply and demand (between insurers, advisers and lives insured).
However the government should be able to influence policy.
As an example, I wrote in to the Royal Commission and suggested that all advisers should have been required to ask their clients for how many years they wanted to hold on to their insurances (Life, TPD, Trauma &IP) and if the answer was more than 15 or 20 years (eg till retirement at 60, 65 or 70), then the government policy COULD have been that advisers were required as a default to recommend Level premiums but could provide a justification if they wanted to recommend Stepped premiums. This would have solved the alleged “churning” issue and made it profitable for insurers.
… well that horse has bolted hasn’t it?!
The principle still remains, the government should stay out of pricing and product and throw LIF on the scrapheap of STOOOOPID IDEAS conjured up by salaried bureaucrats and academics in their ivory towers rather than practising life insurance advisers in the real world.
Let insurers, set their own upfront commissions, trail commissions and clawbacks WITHOUT COLLUSION (in accordance to the Trade Practices Act) and the government policy can be that advisers have to provide a document that must be initiated by the client that shows the Commissions (upfront and trail) and ckawbacks of all life insurance companies AS WELL AS premium stability over the last 10 years for stepped, level and optimum (or any other hybrid premiums unique to that insurer in table and graphical format and allow free market economics to rin its course.
There is still time yet to save the insurance industry in Australia by adhering to the principle of “Government can only influence policy and not price or product”!