In the wake of the recently proposed life insurance industry framework, ClearView managing director Simon Swanson told ifa he is “disappointed” that the issue of widening APLs has not been immediately addressed, especially for dealer groups inside vertically integrated companies.
“I [don’t] understand why you wouldn’t deal with the obvious conflict of interest inside vertically integrated companies considering most of the advice issues have come from [within these businesses],” Mr Swanson said.
“I hope that the government will require all vertically integrated companies to have all life insurers on their dealer group APLs.
“That would remove the obvious conflict of interest and ensure that financial advisers are able to provide the best life insurance for their clients’ needs,” Mr Swanson said.
Also speaking to ifa, Zurich general manager of retail life and investments Philip Kewin said he would support any position to widen APLs as it will be “healthy for competition”.
“There is a strong argument [to have as] many insurers [on an APL] as you can, because that opens up the architecture completely [and this will] mean everyone can compete on a level playing field,” Mr Kewin said.
“I know a lot of advisers – and rightly so – are frustrated that the front end has all been about their commission and not a lot about what insurers have to do and what dealer groups have to do.
“But now we have a framework we can start to look at those sorts of things,” he said.
The recently announced framework which was agreed upon by the AFA, FPA and FSC outlines that the government is currently considering measurers to widen APLs by 1 July 2016.
The Trowbridge Report recommended all dealer groups have a minimum of half of the 13 life insurance providers available on their APLs.
My understanding is that the proposed re-structuring of the remuneration models for advisers will not be legislated.
If this is in fact the case, an insurer
who truly values the relationship and longevity with the IFA market should be able to make their own decision as to how they will structure their remuneration models, without breaching the law. This is a free market economy where the price of goods and services are determined by the market.
Therefore, it is not appropriate that the price of a service such as advice is set or mandated.
If this were the case, why isn’t the price of the product being mandated also?
Why is it not a case that all insurance products will be priced the same?
The reason is that there are many variables in various products that wouldn’t allow this to happen and so it is exactly the same with the range and complexity of the advice space.
If insurers know well that certain models of remuneration have worked well for them and supports both a healthy sustainability and a valid level of remuneration to advisers for the advice provided, then there should be no restriction , breach or penalty imposed on any insurer who determines their preferred strategic position.
Lets see if a quality insurer who truly values the adviser relationship has the courage to announce their own remuneration models and demonstrate that they will not be dictated to in a free market economy by group and cartel-like manipulation.
Dear “What” and “ozwire”- so which of the big 4 do you work for? I work for ClearView- how about you post under your real name and disclose who you work for?
As for your “comments”- adds nothing to the debate. Ever heard of an organisation called APRA and the requirements to be a life insurer in Australia? There is no legitimate reason not to have all 13 on your APL as we at ClearView do.
I agree with this. The sad part of it is that even IF licensee’s open up APL’s vertically aligned firms will still heavily write towards the institutional owner. They will not last in the group if they don’t. No one puts it in writing these days but we all know it still happens.
What rubbish from Clearview.
Sounds rather hypocritical to me to suggest that to research half the market can be sufficient to look after a clients best interest.
Maybe we can get away with only asking half the questions required to provide advice too!
I fail to see how an improvement for the client in any of the changes proposed (bar change of comm rates).
Dear IFA,
It must be noted that deny insurance claims from a life insured part is very disappointing based on a stand of the insurer of “insuffient evidence”.
Insurers have taken the view of in regards to a marketable product of “we look for ways of paying the claim.’
Very disappointed.
Kind regards,
Adrian Totolos.
Business Analyst.
You know, seeing how every one in the “negotiations ” laid down and let the banks run over them, I don’t think the banks will ever agree to an open APL.
The fact that it will reviewed by 1 July 16, and was not apparently important enough to be done from 1 Jan 16, means the banks are not budging.
Banks have a winner take all attitude, and we sure got taken, particularly on the clawback !!
Could not agree more with Clearview when we risk writers are all taking a revenue haircut Jan 1 2016. I/We should be able to deal with all 13 insurers not 7 insurers. They are all APRA approved so no risk.
The level comms should remain at 30% as the life -risk industry talks about sustainable risk advice businesses. Cannot have it both ways I feel some insurers having a each way bet here. Telling me one thing and saying to the FSC something else.
Trowbridge recommendation was for half – good one John look after your buddies.
That would effectively mean NO change.
Approval signals that some will be “**approved**” and some will be “**rejected**”. That’s what an APL is.
Clearview’ statement is possibly the stupidest statement on this site for a while. Where is the research filter in simply adding everybody to the APL?
The true test of whether a vertically integrated APL is valid is when there is a genuine possibility that the “in-house parent” product can be made non-recommended!!