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.”
In defence of Zurich, I have read their 18 page submission to the Senate Economics Legislation Committee and they are extremely supportive in their submission of the risk adviser and express many concerns about the long term negative impacts on the self employed market.
For example they believe that 80% upfront and 20% trail model is capable of supporting advisers but they are concerned about any further commission reductions.
Only two insurers made submissions to the Senate, one of which was Zurich. it is pretty obvious to me why the others didn’t and that is because they are getting what they want.
I agree that advisers have a right to be upset and angry at being sold out by the FSC but I don’t believe Zurich is plotting behind our backs as their submission clearly supports the self employed risk adviser. I just wish that more insurers thought like Zurich and stood up for advisers.
I recommend that advisers contact their BDM and access a copy of their submission as it is excellent reading.
too bad you didnt see fit to state this earlier, that honesty thing just keeps getting in the way of insurers, doesn’t it?
Wow. Great of Zurich to leave it to the 11th hour to highlight that they actually don’t have a lapse issue. Didn’t see them ever highlighting this before.
Zurich as with the other insurers were determined to see the LIF go through to increase profits at the expense of advisers and customers and like the others have been increasing their premiums leading up to this.
Why doesn’t Zurich publish the full submission they made? Because I’ll bet it was agreeing with the reforms and they don’t want advisers to see that bit.
Come on Zurich publish the full submission you wrote.