Speaking at the FSC Life Insurance Conference in Sydney on Thursday, Geoff Summerhayes, chief executive of Suncorp’s life business, said product providers need to “face in” to the report’s conclusions.
“There are absolutely differences of opinion, but the manufacturers have created this situation in terms of our remuneration structures and I think the manufacturers absolutely accept that it is also our position to solve that,” Mr Summerhayes said.
“That is having consequences right down the value chain, but the payments are made out of manufacturers and it is up to the manufacturers to face into that and [remove] that misalignment.”
ANZ Global Wealth insurance MD Alexis George said more broadly that the industry needs to “be responsible and move forward” and “embrace the challenge”.
The comments follow those of report author John Trowbridge at a press conference last week in which the LIAWG chairman said he feels for advisers as victims of a problematic system “not of their own making”.
“They have made the best of it as it is and they now have to make the best of a different environment in the future and I want to see the licensees and the insurers take a lead in dealing with these issues,” Mr Trowbridge said.
Yes, the life industry created the current problems, but not by their remuneration structures. The problems are caused by life office sales teams actively courting and encouraging churn. Of course when everyone does it, nobody wins. So why haven’t the life insurers tried to fix the problem by reining in the obvious cases of churn, and modifying the costly behaviour of their sales teams?
It seems they would rather use it as an excuse to reduce the remuneration paid to all advisers, than confront the dubious practices of their sales teams and “loyal” churners.
What’s the bet they still find ways to reward the churners when commissions go down.
I totally agree with Geoff Summerhayes, I have been with the same Dealer for 30 years. I can count on one hand the number of policies that have lapsed over that period of time. I have never received any acknowledgement for the quality of business, that stays on the life companies books for such a long period of time. (certainly longer than what has been quoted in the recent ASIC report).Whereas the so called big writters ( new premium income) are given plenty of accolades from the life companies.
this was always going to happen. When life insurance was made a commodity via comparison sites or “choose your own cover” and commissions were paid at the same rate as a fully advised policies..something was not right. We need to usually visit the client twice, we offer a full ongoing service offering including claims support- we absolutely deserved the comm. Something had to give. The better solution may have been to segregate the non advised models from the advised models and pay commissions accordingly.