In a submission to the Senate Economics Legislation Committee in response to The Corporations Amendment (Life Insurance Remuneration Arrangements) Bill 2016, Zurich said while it is appropriate for ASIC to monitor the retention of policies, it can be done so by an insurer.
“For many observers, the spectre of inappropriate policy replacement is at the very centre of this debate and is the ultimate demonstration of poor advice,” the submission said.
“We believe our own retention rates prove the problem of ‘churn’ is one that can be satisfactorily self-managed by insurers, and that whilst regulator monitoring is appropriate, regulator intervention is not necessary.”
Zurich also added that the “perceived high incidence” of policy replacement is often put down as a major issue in terms of customer outcomes, but life insurers have taken a more “proactive approach” to managing customer retention.
This managing of customer retention over the last few years has led to a “clearly evident” positive impact.
Following the commencement of the LIF, the corporate regulator is scheduled to conduct another review of the life sector to determine whether the reforms are actually are having an effect on the industry.
Should the review find that the reforms are not leading to appropriate consumer outcomes, the government says it will mandate level commissions across the industry.
However, Zurich has said it is not supportive of any move to a level only commission regime, nor one where up-front caps are lower than those already proposed.
“We therefore believe it is vital that all stakeholders have absolute clarity about the methodology, metrics, and objectives that will be used to [determine] whether the reforms have achieved the intended outcomes,” the submission said.
“While we believe the reforms will have some immediate impact, we believe a minimum of three years is required before any substantial impact can be properly measured.”
ifa understands that the senate committe is expected to make its judgement on the legislation today.
And what makes Zurich different to any other insurer in this regard? Big fat zero. They could stop churners today and always had the ability. Happy for advisers to be slagged wholesale for the sins of a few who could have been stopped dead in their tracks. Just hope the Zurich view grows some legs and has the legislators looking in the right area for a change. Lets see if the other insurers and the FSC continue to push the ‘Advisers are at fault’ agenda given the Zurich view is not in their financial interests.
Wow! At least one company has come out clean that the solution was always in the insurers hands. This is a real Homer Simpson D’Oh! moment.
Just about 2 years too late unfortunately.
Sorry guys –
the LIF debate was never about the customer – or churning or quality of advice – they had a solution – and the Insurers were looking for a way to bring it into being.
“Follow the money” has always been the driving issue here – reduction in costs – and of their own making, the insurers started an arms war with each other over commissions paid. – there has been a major incentive to get distribution by inflating commissions.
To then sheet this home as greedy advisers is nothing short of disingenuous.and a salient lesson to the idealist types – when the commercial reality is to the fore – its everyone for themselves. (so aptly demonstrated by the FSC)
What is really lacking is honesty in the debate – and of course our erstwhile lefties in cohorts with the industry funds have been having a field day as the distribution channels have turned on each other – the IFA’s are but one of many casualties here – and we constitute a very small element in the broader insurance market.
In 24 months time – there will be another moral panic that cant be quantified to justify the reduction in distribution costs.
based on poor sampling and non representative data.
Meanwhile we cant get consistent definitions, claims are a battle ground, and convenient expediency are all to common events.
basically a total lack of integrity and leadership.
now back to the client that has a claim
Finally an insurance company tells the truth about the Life Insurance companies can monitor and manage “churning”.
And certainly if they are going to manage “Churning” the first thing they should be doing is providing the statistics of how much it occurs, who is doing it and what they have done to cease it.
Nice to see one company is starting to talk sense…Though it might just be a bit of window dressing as the horse may have already bolted..
Thanks Zurich for supporting advisers.
Of course the insurance companies can police the churners if they choose to.
Clearly the government are looking at level premiums only in 2018 regardless of whether or not that is feasible for the bulk of insurance advisers and businesses.
Are other life companies going to release parts of their submissions to the senate or do they have something to hide?
Hat’s off to Zurich! The first Company to come out and directly oppose the FSC, you will get more support from me.
Shouldn’t the insurers be more worried about actually paying out claims than fixing churning, which they know is a pretty small issue. But hey, good distraction strategy Zurich.
At last a Insurance Company happy to stand up for the truth and state the obvious
Remember that when you are considering a insurance company to place new business with !
Where are the others ,time for them to go public !