The Zurich research, conducted by Rice Warner on its behalf, found only 8 per cent of those surveyed indicated they were willing to pay more than $1,000 as an out of pocket fee. By contrast, 93 per cent of advisers said they would need to charge in excess of $1,000.
None of the consumers surveyed said they were willing to pay $2,000 or more, the amount that almost two-thirds of advisers said they would need to charge, the research said.
Further, almost 30 per cent of consumers said they were not willing to pay a fee at all. Zurich said this finding “illustrates the size of the challenge ahead if expert help with life insurance is to remain within reach of everyday Australians”.
Zurich life and investments chief executive Tim Bailey said a major priority for insurers and the advice profession, in partnership with ASIC and government, should be to help create a consistent and robust evidence base to be used by the many stakeholders who will shape the sector over the coming years.
“Life insurance is not without its complexities, and some of the commentary we have heard since the royal commission highlights a genuine lack of understanding of the sector and the interplay between the major channels and product types,” he said.
“For example, an appreciation of the differences between group and retail, the dynamics at play, and the role each plays in delivering positive consumer outcomes, does not seem to be evident in many discussions.
“Similarly, it is largely overlooked that since the implementation of LIF, up-front commission rates are now standardised, rendering one of the major objections to commissions – a fear of bias towards products or providers paying higher rates – effectively redundant.”
The research examined the attitudes of 1,000 Australian adults towards a range of issues relating to life insurance advice.
some great comments on this thread. Its time to care about oneself now. 30 odd years and no complaints and literally an estimated 200 + claims done. Some great outcomes. Good bye, its all gone stupid.
Unfortunately we are all up in arms about 5 years too late. I wanted to talk to our illustrious leader at Zurich, but he took to the stage, blabbed on about all the things that are wrong (not everything he said was accurate), but didn’t stay around for questions and feedback…I wonder why that is…when the second in charge was confronted and questioned that if your are going to Canberra to promote how good we are as an industry at claim time, then I suggested to her, don’t waste your time as it is like telling the Media that a plane with 200 people on board took off from Brisbane and landed safely in Sydney…it’s expected and so therefore there is no story. The difference between Life Insurance and Mortgage Brokers is that Mortgage Brokers sell something that people want…MONEY…and we sell an intangible promise and hope for the best…wake up people, we are screwed and it is NOT AFA’s fault…I blame the FSC, the insurers…I don’t even blame the FPA as I suspect they really don’t have a clue what life insurance means and how it is sold because they are more interested in the people that have wealth…call me cynical but this is the way I see things so tell someone how gives a $h!t
i really feel we have to take a leaf out of the mortgage brokers book, MFAA lobbied actively for them when their commission trail was threatened (we know it isn’t over yet but they obtained a positive result from the Liberal party) yet where are the AFA/FPA when we NEED them…
We just lay down and take it. Our industry is being decimated and overly regulated, I recommend we go back to basics and start again, we can’t do any worse…
The survey should have asked is the consumer happy for the adviser to receive a payment from the insurance company if it meant that the cost to get the advice significantly reduces ?
This industry is run by clowns
Wouldn’t it be interesting to know where (or even if) Ken Hayne chooses to insure his life or those of his loved ones?
An industry fund / government sector super / Youi / Real Insurance perhaps?
Ken is a learned and most likely also a privileged person who has proven how little he knows about what goes on in the real world with advised life insurance clients who in the main require benefits to be sold to them as most are not lining up to buy…
Does Ken care? I don’t think so and that is a real shame for the future generation many of whom will not hold adequate levels of life insurance benefits that actually pay out when needed.
like we need research to state the bleeding obvious – the consumer is under significant pressure – cost is the biggest barrier to entry. Of course, we have the life companies retaining initial margins on sales – yet the adviser (the life companies distribution chain) is the lightning rod of the commercial pain. Its as if half the marketing guys got a conceded pass with their life education – sorry must go back to Uni now. – But you are all aware this is not about the consumer or margins – this is about destroying the IFA model. Make it unprofitable – then we have fewer people in business – a tardy thing that – people having to sell. For mine life insurance and its benefits have to be sold. London to a brick – all the wise owls saying we should do away with commissions – wouldn’t even understand the role of personal insurance – nor have they had to hand over claim forms and or an event payment to a widow for example
That White Paper also revealed…
1) Australia’s insurance literacy rate is amongst the lowest of 10 major countries (which helps explain why the media, ASIC, numerous Government MP’s and people like Kenneth Hayne fail to understand how the life insurance industry works);
2) The Australia’s initial remuneration is also already the lowest of 7 major nations. The US pays 70-120%) the UK now pays a staggering 200% – 250%), NZ pays 150-180%, Japan pays 115% and Germany pays 98%. Ireland also pays a higher rate but use a different formula.
The three developed nations that banned commissions on life insurance (Finland in 2005, Denmark in 2006 and the Netherlands in 2013) also saw reductions in intermediaries/brokers by 15 to 30% afterwards so clearly, removing commissions as the primary source of income for advisers and consumers is a bad idea.
It just staggers me that the regulators, Kenneth Hayne and both sides of politics can’t see this!!!
they can see this – the collective hope is death by a thousand cuts – get those advisers out of business quick smart
The whole thing is witch hunt, with mortgage brokers and risk advisers taking the hi. Is anyone surprised by this? I’m not. I had a meeting yesterday with a very experienced risk adviser, he has been in the industry almost 40 years. He tried fee for service for 12 months. He said it was a complete failure. He was charging no more than $2000 to organise insurance and people just refused to pay it. His clientele are high end professionals and mature business owners. If they don’t pay and have the cash-flow how will small business, mum and dad pay? head over to your industry super fund where you get expensive insurance, rubbish definitions and no one to help you with the claim. What a joke.
And the results of this research is a surprise to?
I was surprised 7% of advisers would do risk advice for $1,000 or less.
obviously not costing their time properly –
All the insurance companies were very happy commissions went down until now they can’t push junk insurance anymore…