Speaking to Risk Adviser, Mr Clark said that while discussion of the details of the clawback policy continues, he does not want to see a result that is “unduly penal” or creates uncertainty for advisers.
“That is something that is coming through in some of the dialogue from advisers – that [the clawback policy] creates uncertainty [for their businesses], and I understand those points.”
Mr Clark added there are some principles around the clawback policy that operate today and that should be incorporated into the future model.
An example would be the clawback policy not applying in the event of a claim, he said.
“For me and for TAL, that intuitively makes sense,” he said. “A clawback shouldn’t apply in the event of a claim as that is what we are here as advisers and insurers to do and support.
“It is certainly not adviser-initiated, so why should a clawback arrangement apply in the event of a claim, whether it be a death, disability or a trauma claim,” Mr Clark said.
Noting that the discussions had brought a range of opinions to the table, Mr Clark said he wanted to ensure the advice industry continued to “prosper and thrive”.
“We didn’t want to see an industry which would be materially smaller than what it is today although we supported some change as well,” he said.
“Overall, in terms of the final framework that [Assistant Treasurer Josh] Frydenberg announced recently, there were some common themes in there, at least in terms of how we were thinking about the situation.
“As an example, we were supporting commission structures around the order that [Mr Frydenberg] announced.”
With the specifics of the reforms proposed by Mr Frydenberg still being debated, Mr Clark said advisers and insurers need to find common ground so the industry can move forward with certainty.
“I think that, for advisers in particular, the lack of certainty [has frustrated them] for some time and I am completely empathetic to them,” he said.
“Running a small business with a lack of certainty around what the future looks like is not helpful, it is not good and we need to provide that certainty as quickly as we can,” Mr Clark said.
I find this article very insulting. It appears Brett Clark is trying to be perceived as being on the advisers side by saying claims shouldn’t be subject to clawback.
Of course not! They never have been or should be.
As a CEO of an insurance company Brett is one of those who has stitched up advisers together with the FSC to simply increase profits at the expense of the adviser.
The fact is that giving independent risk advice under the reduced commission structure AND being subject to a 3 year clawback makes writing risk unprofitable in the future.
The fact is that 38% (Riskinfo poll) of advises will be looking to exit the industry.
The fact is that not a single CEO (including Brett Clark) has stated that they believe insurance premiums will reduce (only BT have been brave enough to state that they do not see a reduction in premiums under these proposals).
The fact is that more advisers will now have to charge fees, making things worse for the end customer.
The fact is that it will cost the customer more to access independent advice, there will be less independent advisers and premiums will not reduce (more likely to increase). making a mockery that these proposals were ever about the customer.
The fact is that it’s the insurance companies fault for the perception of churning in the industry.
Can everyone else remember the takeover terms campaign pushed by TAL against AIA a few years ago when they had issues???
Raising premiums by 20-30% every year is the single biggest issue as to why clients cancel policies, reduce cover or shop around for better deals – its that simple!
And yet we still see companies like TAL bloated with over paid BDM’s and executives who do little or nothing to justify their excessive salaries and bonuses.
Warren, I don’t have a problem with the reduction in upfront, [ however it should be a choice of hybrid or level ] and the myth that adviser’s get 115% is incorrect [ after the licence fee is deducted it is much lower ]. My problem is with the claw back provisions, and if there is a reduction to the commissions then this should also be reflected in the reduction to the premiums charged by the Insurer.
This whole “reform package” is nothing more than an exercise of decreasing the cost to the insurance companies that created the mess in the first place. I have in excess of a 1000 clients and NOT ONE client has EVER asked what I earn in my 30 years in the industry.
The whole solution is such like a shot gun blast. Many “pellets” are useless and fail to be useful but still cost. A targeted aproach where BDM’s could be monitored and be the monitor and the records kept within the industry. As i write most recommendations with level premiums and avoid as best as I can those solutions that could become grandfathered. Thus My clients cant always be in the :best” contract but are well cared for and have long term affordability………but cant really be churned. No credit for those advisors where clearly there is no churn..
So you’re saying we shouldn’t also change and that it is all the insurer’s fault? The days of 115% upfront are gone. Time to accept it and work out how to move forward.
No further discussion is required. If the “powers that be” are focussed on whether a claim should be included as a clawback then everyone had lost the plot. For the future of the Industry go back to square one and think things through more logically.
I agree with Mr Clarke’s view. But I also go a step further, in that 3 years is a long time for a policy to be left in place without “change”. Not even changing to another fund, known as churning, but in fine tuning existing policies due to life changes. What about a $1M life policy being reduced to $700K cover due to a major debt being extinguished? In doing annual reviews with clients, do I then leave them paying higher premiums than are necessary to their new situation, for up to 2 years because I am worried about clawback? In the end, the client loses out.
Finally a crack is appearing.
The reforms are WRONG, they punish hard working honest Advisers and do nothing to fix the Insurance Industry’s problems.
The Insurers need to take on the responsibility of lowering the cost to place insurance and to eliminate the churners.
We need to keep applying the pressure on them to change rather than the Advisers.