The CEO of the Council of Australian Life Insurers (CALI), Christine Cupitt, believes insurers should be allowed to provide simple advice on their own products in order to bridge the advice gap.
Speaking today before the Senate economics legislation committee, Cupitt said there is an “advice accessibility crisis in Australia”.
“The Delivering Better Financial Outcomes and Other Measures Bill will help expand Australians’ access to advice and back-in the vital work of financial advisers across the country,” she will tell the committee in her opening statement.
“As cost-of-living pressures rise, many people are now less certain about their financial situation. They know they need to manage their household balance sheet, and getting professional advice on their life insurance is an important part of that. But this can cost more than $3,000.”
Citing CALI’s research, Cupitt shared that 7 in 10 Australians are concerned about the impact of cost of living when it comes to taking out or continuing to pay for life insurance.
“Access to affordable advice helps empower people to make informed choices so they can live in a healthy, confident, and secure way over their lifetime,” the CEO said.
“In the past three months alone, more than a quarter of Australians have considered getting financial advice on life insurance but haven’t acted on it. Just 8 per cent have received it in the same time frame.
“People need someone to talk to. Making these decisions is hard, and they should not have to do it alone.”
While acknowledging that “financial advisers do an incredible job” helping Australians with “personalised and holistic financial plans”, Cupitt added that there aren’t enough of them, with just 1,000 nationally who regularly help people navigate life insurance products.
Noting that CALI is working with the government on the next tranche of financial advice reforms, Cupitt said: “We want to see legislation introduced that allows life insurers to provide simple advice on their own products, when customers ask them to”.
“Of course, this should only happen with appropriate limitations and strong consumer protections.
“We should not be turning people away when they ring our call centres. After all, giving simple answers to simple questions is basic customer service.”
For people whose needs are more complicated, Cupitt said life insurers will continue to put them in contact with financial planners who can give them broader advice that compares products across the market.
“But for more simple matters that relate to one life insurer’s products alone and where people can’t afford or don’t want a holistic plan, we want to give Australians extra choice at no cost to them.
“This will be very different to the role of financial advisers. We only want to complement the important and valuable work they do, not get in their way.”
In her original Quality of Advice Review (QAR) report, reviewer Michelle Levy suggested that alongside superannuation funds, banks and insurers should be allowed to provide limited advice.
While Financial Services Minister Stephen Jones initially wasn’t too interested in allowing banks and insurers to provide advice, he later suggested this would be enabled in stream two of the QAR-inspired legislation.
Namely, in December last year Jones said that the government supports the creation of a new class of financial advice providers – to be termed “qualified advisers”.
“We must give consumers what they actually need,” the minister said.
“These changes will apply across all financial institutions, including superannuation funds, life and general insurers, and banks. It is expected that this new class – to be termed ‘qualified advisers’ – will generally be employees of licensed financial institutions. The licensee will be wholly responsible for the advice provided.”
This announcement was viewed as one that grants banks and insurers the ability to give customers personal advice and unwinds some of the tough rules imposed by the Hayne royal commission.
However, draft legislation for this stream of reforms has yet to see the light of day.
AIA the main offender, Now they have there own team od sales persons ready to go.
CALI members like AIA have been angling for this for years.
Started with the hoax Trowbridge report;
This may well help decrease the growing number of underinsured Australians as many advisers either left the industry or many that stayed stopped offering life insurance advice due to the LIF reforms which have proven to be a disaster.
Cali fix life before you suggest anything. Redundant product driver morons
How many nails does the adviser coffin require?
Insurers did this: increased stepped and level premiums, increased responsibility period, increased claim-hurdles, decreased product value and decreased commissions.
Christine…How simple is ” simple ” ??
The vast majority of Life Insurers as members of the FSC during the LIF negotiations consistently supported the reduction in commission remuneration paid to Advisers.
Only 2 of those Life Insurers were vocal enough to challenge the thought processes.
These were Zurich and ClearView at the time.
The rest just wanted to cut the loyal Risk Advisers off at the knees in the pursuit of profit for their shareholders.
This was an unmitigated failure of massive proportions for the Life Insurance business.
Now, as the new business inflows have dried up, claims costs have escalated leaving a ever decreasing pool of consistent policy holders who are regularly cancelling cover due to exorbitant and unsustainable premium increases, you want to be able to provide ” simple ” advice regarding Life Insurance.
The Life Insurance industry crapped in it’s own nest and cut off the vibrant, profitable source of quality risk business.
I trust the lesson has been learnt but I doubt it.
Just keeps coming from all angles…..
Add this to the labour Industry fund tidal wave that will destroy most advisers’ lives. What is occurring is tragic for us all. We simply can’t compete.
Cupitt was right to highlight the issue of not being able to engage with customers due to fears of entering the liability space of personal advice. However, she missed addressing the core reason behind this problem: the significant deterioration of general advice law and its interpretation. The solution lies in strengthening and clarifying the framework for general advice (virtually destroyed by ASIC vs Westpac), not in creating a new raft of legislation. By firming up general advice laws, we can empower life insurers to provide necessary guidance without overstepping boundaries, ensuring customers receive the support they need without unnecessary legal complications. It’s a simple solution that too few either understand or are arguing for.
The “Advice Gap” can be fixed with the removal of red tape which helps no one.
Seriously, why is this difficult to understand ?
BTW:
What is simple of advice ?
What will be the funding mechanism ?
Where is the red tape relief ?????
The situation of this industry is quite literally insane.