The Swiss Re Institute’s Life and Health Insurance Inclusion Radar report evaluated 16 economies, with Australia placing seventh with an aggregate score of 0.52.
According to the report, a score closer to 1 represents a high level of inclusion, while a score closer to 0 indicates a lack of inclusion.
The United States secured the top spot with a score of 0.67, followed by Japan with 0.66, Canada with 0.64, South Africa with 0.62, the United Kingdom with 0.61, India with 0.52, and Australia in seventh place.
The study also included 11 emerging markets, with South Africa and India among them.
Australia was particularly disappointing regarding the availability of life and health insurance, with a score of 0.47, well below the advanced market average of 0.67 and that among emerging markets of 0.53.
Conversely, the US garnered an availability rating of 0.73, while the UK scored 0.72.
In fact, Swiss Re noted that Australia was the only advanced market with a lower score for availability than the emerging market average.
Moreover, the insurer’s findings showed that in advanced markets, a key driver of availability was the provision of a wide range of cover types and innovative product options to suit consumer needs.
In fact, all advanced markets in the sample, except Australia, performed similarly on this indicator. The study suggested that the reason for this could be associated with regulatory changes following the Hayne royal commission.
Swiss Re, however, flagged that the Quality of Advice Review (QAR) could restore “better levels of inclusion for consumers”.
QAR recommendations impacting insurance
Among the 22 recommendations handed down by the lead of the QAR, Michelle Levy, one concerned the provision of life insurance.
Under this recommendation, Ms Levy advised the government to retain the exception to the ban on conflicted remuneration for benefits given in connection with the issue or sale of a life risk insurance product.
“Commission and clawback rates should be maintained at the current levels,” Ms Levy said. Current levels are 60 per cent for upfront commissions and 20 per cent for trailing commissions, with a two-year clawback.
While the QAR had recommended retaining the current LIF levels for commission and clawbacks, this recommendation came with a condition.
“The condition to this is that the provider of personal advice to a retail client about a life risk insurance product must explain to their client that they will be paid a commission if the client decides to buy the product recommended by the adviser, and they must ask for the client’s consent to accept the commission,” Ms Levy said.
She clarified that if the client does not consent, then the adviser can agree to provide the advice for a fee paid by the client, or they can decline to give the advice.
Moreover, Ms Levy underlined that consent is not intended to be an onerous obligation. Instead, she said, it is intended to foster an open conversation between the adviser and their client.
But, that can’t be right. All the consumer groups, the Govt & LIF, FOFA, FSC etc etc have been making sure consumers are better off & cover will be more affordable by making advisers pay & pay.
You get what you sow