New numbers from Adviser Ratings show that half of all life policies were written by just 493 advisers in the six months to 30 June 2023. The other 50 per cent were written by 5,880 advisers, taking the total pool of advisers that wrote life policies to 6,373.
“The retail life industry is currently surviving on a small cohort of advisers to bring in new business,” Adviser Ratings said.
“With 15,634 advisers in Australia at the end of June, in the last six months, only 40 per cent wrote a life insurance policy, what was once a standard part of an adviser’s armoury when onboarding a client or reviewing as a staple of their annual meeting.
“As advisers have shifted to servicing more retirees and ‘riskies’ have fled in droves, underinsurance is worse than ever.”
The firm added that 127 advisers were responsible for 25 per cent of all policies and earned an average of $200,000 to $250,000 in upfront commissions every year, noting that this represents a “a significant drop from the earning potential prior to LIF”.
“Which begs the question, if the top line is immovable, will broader technology solutions, the QAR or adviser recruitment help bridge the gap?” Adviser Ratings asked.
In order to bridge this gap and address under-served segments of the market, Adviser Ratings said, “all stakeholders need to come together to find a viable solution”.
“Technology and customer centricity will play a role, but government incentives such as rebates or tax deductibility on death insurance should also be on the table,” it said.
“And will super funds and group life play a larger role? The recognition of the issue is even more apparent following the demise of Integrity Life. The insurers are awake to the issue, and have thrown their support behind CALI, the Council of Australian Life Insurers, to help enliven the sector and provide a united voice for stakeholders and to government.”
Industry veteran Marc Fabris, who recently launched risk adviser support platform Risk Hub, said the numbers highlight the impact of the various changes and pressures the industry has witnessed over the last few years, adding that the risk industry has “certainly been suffering”.
“I do think there is a real opportunity for growth though. The research highlights the number of advisers with a very small focus on risk advice,” Mr Fabris said.
“For these advisers – unsurprisingly it would hardly seem worth the effort. When it isn’t a regular process within the business it’s unlikely to be streamlined – and therefore is resource heavy. Tripling the new business for risk therefore wouldn’t treble the effort for the practice.
“So, there is absolutely an opportunity for the ‘occasional’ risk writers to make it a more viable proposition – making it more beneficial for their business and more beneficial for their clients.”
He added that help is required if risk advice has any chance to return to the forefront.
“Assuming there is to be no reversion to previous commission rates, we need to bring more efficiency into the value chain, to make providing risk advice more viable,” Mr Fabris said.
“Some of this is in the hands of advisers – internal processes need to become more seamless. Some is in the hands of insurers – to help make the pre-assessment, onboarding, and review processes more efficient.
“Then there are also vendors who help deliver services, such as technology or related services which help reduce manual effort and turnaround times.”
I still surprised Riskies are earning 200k+ in upfronts pa? I barely see any new biz anymore and re writing any existing is next to zero now given the IP changes.
The life insurers got exactly what they didn’t want after their executives were vocal supporters of LIF. They are to blame for the underinsurance problem that is now continuing to grow throughout Australia and they should feel ashamed. If any current insurance company executives reading this care enough to offer real solutions to help turn this societal problem around then please speak up! Increasing brokerage rates to 80/20 and decreasing claw back periods to 12 months would be a good first step. Creating more efficiency is fine Mark but that alone does not pay the bills nor will
that encourage more advisers to share the load of writing risk insurance and see an increase of new business levels.
No surprise the regulators are clueless with reduced coms and 2 year claw back it’s just not worth it
Nothing new here, Mr. Fabris know his stuff well. If commissions don’t increase to at least 100/20 then life industry is doomed. Already WELL on this trajectory, methinks. The arrogant life company execs wouldn’t listen when we advisers (Riskies) told them what would happen with LIF and even previous to it. Yep, 60/20 and 2 year clawbacks – what’s not to love about businesses ruined, mental health issues and adviser suicides. Don’t even start me on an AQF8 uni degress for a risky to stay in the business after 36 years! How any idiot thought any of this was a good or sustainable idea is beyond comprehension.
Expect many more mergers which will resemble deck chairs on the Titanic. THEN you will see these larger temporarily ‘surviving’ life groups eyeing closely their stat funds as this will be their only potential source of income as the new business not only halves then quarters then disappears.
APRA will need backup from ASIC to keep the life companies greedy little hands off the stat funds to pay their daily operating costs/staff/wages/rents. All because the bloated execs thought they knew more than 30+ year experienced advisers at the coal face. There should be criminal or civil charges leveled at that point but will be too late to do good, only to punish the perpetrators.
Seriously, technology is the issue now?
The 433 Advisers that placed half of all Life policies represents only 2.8% of the total Adviser numbers.
The Advisers placing the remaining half are simply dabbling & will most likely reduce placements even further.
This is a disaster.
How on this earth can any single individual look back on the LIF train wreck & say this was the right direction??
It was and has been an ultimate failure of epic proportions.
It’s not possible to provide Advice in the current compliance environment. You’re a ticking time bomb if you do. Crazy if you think you can. ASIC prefers Australians to either purchase poor policies via a TV commercial or set up Go Fund me page than seek financial advice.
They bit the hand that fed them. Suffer, now.
What annoys me is the pay cut to commission which cost me $40,000 pa and we have been writing hybrid since 2012.Commission needs to be at least 80/20 to make it viable,everything else being said is just patronising.
Correct Mike – with the addition of 100% upfront – not 80%. 80% will mostly just meet costs in this oppressive regime – there has to be [i][b]some [/b][/i]incentive to continue in this battered and dying profession. Until then the struggling risk industry is only deck chairs on the Titanic.
Not surprising. The compliance is huge and sometimes confusing! It’s hard enough to service our existing book of clients ($1.5Million approx., of premium) without worrying about new business.
Ms Levy’s QAR Report recommended keeping the status quo for the Risk industry…..that sums up Ms Levy’s understanding of our industry…..QAR has wasted 16 months of precious time to reverse Frydenberg’s self – serving ridiculous legislation.
The life insurance companies waged a war against financial advisers. They won, and in doing so killed their own businesses. Breathtaking stupidity. You couldn’t make this stuff up!