In October, the Australian Prudential Regulation Authority (APRA) unveiled a discussion paper outlining the Insurance Data Transformation (IDT) project. The initiative seeks to gather data facilitating a more comprehensive evaluation of prudential and conduct risks within the insurance industry for regulators, policymakers, and insurers.
Currently, APRA said, there are “insights gaps” that limit the data’s usefulness and inhibit the “strategic drive for data-enabled decision making”.
In response to the discussion paper, Super Consumers and the Financial Rights Legal Centre issued 12 recommendations in a joint submission, urging a closer examination of over and underinsurance in superannuation as part of a broader independent review. They emphasised the significant impact of insurance within super, costing Australians over $6 billion annually.
Additionally, the pair called for clarity in the objectives of the IDT project, specifying that the data holds significance for consumer advocates similar to ASIC, and advocated for the publication of insurance claims and disputes data at the super fund product level by agencies.
However, in a request that could impact advisers, Super Consumers and the Financial Rights Legal Centre have asked APRA to consider enhancements to the commission data table to include actual commissions paid by insurers to advisers.
“The additional product-level information that should be included is: number of advisers paid commissions by insurers, amount paid in upfront commissions, and amount paid in trailing commissions,” the submission reads.
“This would provide greater insights into the costs of selling insurance in different channels.”
The consumer advocacy groups argued that this would provide better insights into the reality of people’s experiences when making claims on their insurance.
Last week, ifa published the submission addressed to APRA by the Financial Advice Association Australia (FAAA) in which it said that the advised life insurance sector is in crisis.
Among other things, the FAAA said given life insurance is “ultimately about getting benefits to those policyholders (or their families) who have suffered a major injury or illness”, there should be greater insight into the percentage of premiums that end up in the hands of claimants.
“There can be natural leakage from this system through the costs experienced along the value chain, some of which are well understood, however, others are largely unknown,” the FAAA said.
“Financial advisers largely do not charge for the management of claims, unless the claim is particularly complex. There are other stakeholders who do play a role to assist claimants, and can charge a significant amount for this service.
“We would support the collection of data on what percentage of the benefit is paid to a third party when a third party is involved.”
the commissions are already disclosed on the statements of Advice now.
Only if the 10%+ group comissions paid by the Life Companies to the Industry Super Funds are disclosed on the fund members reports as well. This will only end in one outcome – more lawyers taking even bigger cuts of the consumer’s insurance claims.
I read the report and the statements they make around the need for more detailed commissions data do not really support the need for it’s inclusion. Given their focus is on claims experienced mainly with cover held directly under a super fund, I am uncertain how commissions data could help them. How exactly would they as consumer groups use it? A simpler method would be to examine the difference in claim outcome between advised policies, direct policies and super fund group policies. You also need to be able to examine claims for each of these where an adviser became involved and whether or not that adviser was the original servicing adviser. I think they will find the data shows that claims handled by advisers result in better outcome and higher claim amounts than those where a no-win no-fee lawyer becomes involved.
Sure lets get the Adviser Commissions data, it will be quite small and ever increasingly smaller.
As the same time lets get the Life Commissions / back hand Group Life Commissions paid to Industry Supers.
How about the HIDDEN COMMISSIONS charged to every member of Industry Super for Sales Advice, that most members don’t use.
– [b]Industry $uper Total Advice Hidden Commissions = $ Squillions [/b]
[b]- Industry $uper Advice Hidden Commissions for NO SERVICE = 90% of members [/b]
[b]- Industry $uper Life ins Hidden Commissions = $ Squillions. [/b]
Lets see these numbers hey ARPA, Super Consumers and the Financial Rights Legal Centre
Probably not in line with their – future Funding model? Who is paying these people for their opinion and their qualifications are? Do they have a code of Ethics?
[b]This is just BS! [/b]At 6:30 AM this morning I have a notice from an insurer that the premium on long-standing policy is overdue and the policy is about to lapse. This client has a long-term debilitating disease, doesn’t work, but his wife does. She knows the value of his cover but constantly has difficulty paying it on time. For almost 5 years now I have had to maintain a watch over that policy, contact the client urgently, and advise payment urgently. Almost once a month!
At $250 per hour, paid by the 10% renewal commission, this policy and its maintenance is totally uneconomical for me as a businessman. But I have a duty to do my utmost to ensure this policy is retained because the benefit to the client and her family if something happened to her disabled husband is immense. Economically speaking, I lose money every year on this particular policy and others that I have to go out of my way constantly coach policyholders to pay premiums to maintain valuable benefits. And all of that the face of the immoral “[b]gouging[/b]” being undertaking by just about every life insurer on their legacy lump sum products.
My reward, apparently, dispensed by these ideological idiots at Super Consumers and other lawyer based “do-gooders” in so-called consumer representative groups, is to have my ethics queried publicly because I receive a 10% ongoing servicing commission every year. And in the near future, there will be a CLAIM for which I cannot charge a handling fee .
Long walk on a short jetty for both of these ridiculous & meaningless organisations.
They are both a complete & conflicted joke.
Would be more interesting reading the real cost of union superfunds
We disclose commissions, have done for years. Maybe the do-gooders should get their facts straight before going after Advisers
Oh Crickey!!! This old chestnut again. These consumer groups clearly have no idea that BY LAW, advisers are required to fully disclose in Statements of Advice exactly what advisers get paid…..upfront and trail. It’s been that way for years. If these consumer groups think insurance advice is so lucrative, then everyone would be doing it. Alternatively these consumer group who seem to do nothing but incessantly whinge, moan, groan and complain, go setup your own insurance advisory business and see if you guys can operate commercially viable. I am just just sooooo over the constant rhetoric spewed out by these consumer groups who have no idea about commercial realities.
I’d like to see a cost breakdown of group super advice costs allocated to never use the service.
This cost should not be a burden on these members as it is eroding their retirement funds.
I’d like to see the commissions paid by pathology labs and pharma companies to doctors for referrals and prescribing their products.
Consumer groups, being encouraged by the union funds need to move on.
They won’t be happy until all independent advisers are driven out.