In a submission to the parliamentary inquiry into life insurance, the Japanese-owned life insurer said focus must be given to reducing the cost of compliance, improving life insurance SOAs, and taking different insurance specialisations into account when applying technical standards.
“We know many financial advisers are undergoing a challenging period of transition as they adjust to the new Life Insurance Framework and professional standards being developed by the Financial Adviser Standards and Ethics Authority,” said MLC Life chief customer officer Melissa Heyhoe.
“While we support both of these developments, we’re also concerned the existing regulatory requirements lead to risks of increased costs to consumers or force some advisers to exit the industry.”
According to the company’s submission, reducing the cost of compliance would benefit end clients by improving access to advice and improving the overall client experience, and that reducing the need to ‘interrogate’ a client’s full circumstances as part of the SOA process would allow advisers to focus on their needs instead.
Ms Heyhoe cautioned that reforms are needed to ensure life insurance remains a viable business prospect for advisers.
“Advisers are telling us that unless something changes, life insurance may eventually become unviable to advise on due to time and cost burdens,” she said.
“That’s why it’s crucial we take action now to ensure an affordable and accessible financial advice system, and boost the sustainability of the industry.”
What a crock from MLC who were one of the companies who created the LIF. Have they now finally realised that advisers can’t work for free and providing risk advise is now unprofitable? Only planners involved in other areas will bother to undergo the training requirements. Risk advisers are simply better sitting on current books, not writing new business and retiring early.
The same MLC with the other corrupt FSC members who conned the government into the LIF. You reap what you sow and good luck with seeing much in the way of new business in the future. What then? Just increase existing customers premiums like all the other FSC cartel members are doing.
Good grief! Who needs advisers when everybody has life insurance through super? No commission to be paid and highly profitable to boot for all Group Insurers!
How about all the Life Insurers come into the modern world and set up data feeds in the main software systems of Coin and XPlan.
That is one positive step Life Insurers can help with ongoing Life Ins admin efficiency.
But yes over regulation at every turn is killing the whole viability of the Financial Advice industry. Every year more red tape, more regulation, more rubbish rules from pollies who have likely never been through the advice process themselves and show little understanding of it.
I PROPOSE THAT AS AN INDUSTRY WE URGE EVERY POLITICIAN TO GO THROUGH FORMAL FINANCIAL ADVICE SO THEY CAN SEE HOW THE SYSTEM WORKS AND LOOK TO REDUCE OVER REGULATION, RED TAPE AND COSTS TO CLIENTS.
Good work MLC , lets hear from the other providers ( maybe not Comminsure!)
Good luck with wishing compliance costs will reduce, nice to have on your wish list.
New business would be nice too! But as the bite of LIF kicks in from January those advisers that have not costed out their client engagement will start to feel the reality of going out of business slowly, a bit like a frog in a pot of water, ok until it reaches boiling point.
Two thirds of all life insurance is acquired (not sold) thru super, and now that the “Committee” could not agree on what a code of conduct should look like, the consumer will continue to get ripped off thru the new year …wish it wasn’t that way. add to wish list!
Wish Dante and the far-right gang can see Christmas future in four years’ time …only a few very qualified advisers concerned with looking after the needs of a few, fewer the better high net worth clients, don’t expect any of these VQA, very qualified advisers to make a career specialising in the sale of life insurance. (Selling is such a dirty word its advice stupid.)
Finally I wish Kelly would take time over the Christmas break and consider that this great $44 Billion industry is on its knees, the flow on affects the economy, consumers, and the lives of everyone that has wanted to make a difference in people’s lives , by being a life insurance specialist …wish they will build a statue in Canberra.
MLC, AMP, CommInsure, TAL etc caused this mess by selling the churning myth to politicians, creating unworkable and unprofitable conditions for advisers who now decide they no longer want to work in this part of the industry, and now the insurers have the audacity to complain about the mess they created?
ASIC and politicians are driven by popularism.
Insurance outcomes will be a disaster from this intervention.
They have no concept of the viability of a business or the ability of a consumer to afford these things.
When you are on a fat govt payroll you preach the mantra of “let them eat cake”
Remember what happened to her.
Wasn’t MLC one of the insurers that lobbied hard for reduction in commissions (to a maximum up front of 60%). Suddenly they have realised that they have gone too far and they have bitten off the hand that feeds them. MLC – if you are serious about helping advisers and the viability of the industry then go back to the government and tell them that you got it wrong, and it should be 80%
To be fair that was MLC when it was owned by NAB. Now it is owned by Nippon Life, a mutual that is not part of the FSC cartel. Different owner, different story. Good on them for speaking out
The recent Uber case in Europe is an encouraging example of the benefits of fighting back. It was ruled by the court that Uber was a taxi business rather than a technology service and therefore should be governed by taxi laws. The same argument applies here in Australia with business models ( such as robo advice, instos selling general advice ) bypassing advisers and arguing they should be exempt from advice regulation. It is all a big con to support their business model. General advice infers that the customer is getting something more than a product flog. Robo advice implies that they can give advice without understanding the nuance of the client. They should both be subject to the same legislation as the advice industry ie NO CARVE OUTS
We’ve already made a business decision. Once LIF fully implemented we will not take on any new risk only clients. You cannot make money unless you have a long line clean skins on the legislated rates. We’ve 3 clean skins in the last 5 years!
The LIF was put in place by the Risk companies, their new business will get hit.
MLC has been the first to recognise what the risk companies wished for.
I concur, this is a business decision I have come to as well. 2 year chargeback at anytime is ridiculous and I refuse to be held to ransom for THAT long based on the unknown future events that may befall a client. I cannot believe, simply CANNOT, that the life companies allowed this to get through. They have been treacherous to me as an adviser for the last time i will allow it. I’ll have nothing to do with them and just allow them to pay my renewals until I retire, soon, Bugger having income in prgatory for 2 years – they should be abjectly ashamed of themselves. They have deserted advises on a wholesale basis. 2 year C/B would NOT have made it through LIF without life company complicity. Astounding and unforgivable they did not support advisers in this – the most important LIF measure next to reduced commissions. Decades of trust I held in life companies but sadly the latest generation of so called ‘execs’ will be their downfall with anti-adviser moves like this. Snakes, truly no other word.
Excuse me!. Where was this sentiment when the banks drove LIF to cut comms. Now that MLC is no longer sucking on the tit of NAB, its apparently a different tune. Its obviously dawned, even on MLC ( who have long advocated ( Mr Hagger ) that there should fees only for risk) that risk only advisers will be leaving in droves in 2 years, driven by less remuneration and outrageous “education “requirements. And even the dumbest short term thinkers in our life offices have now been reminded that unless 65% of new risk is fully underwritten, the future is bleak.
It’s an interesting assertion you make about needing 65% of new risk to be fully underwritten. Can you expand on the reasons why this would be necessary?
Ask an actuary who does not depend on insurers for stipend. Since group super came in I have asked every actuary I met in the insurance industry-some say 60%, some 75%. But they are adamant there must be a high content of fully underwritten NEW young risk each year, the “stickier” the better. I ask the same question of Chief Officers ( not sales managers nor BDMs ) of life companies and the answer is always the same. That’s why insurers only sign 3 year contracts with super funds -so they can play “pass the parcel “if TPD & IP claims go pear-shape. Some insurers have claims KPIs in contracts to facilitate early “bailing out”.” Hence ever tightening TPD definitions-PECs etc
Great to hear MLC, though politicians and ASIC have been deaf to Advisers calls for years now.
Will the ASIC and the pollies listen to the Insurers instead?
That would be quite curious, given the accusations of conflicted advice Advisers have had to wear over the years.