Speaking to Risk Adviser in an upcoming podcast, Mr Kitchen said he does not believe churning is a “massive issue” across the risk sector, adding that he feels the issue has been “overstated”.
“Most advisers I see want to help [their] client and put the client first, [both] professionally and ethically,” Mr Kitchen said.
He added, however, that he does believe there is a negative perception of advisers that needs to be corrected.
“Until that perception is bridged, that is until the consumer believes in what we do, we won’t truly gain recognition as a profession,” he said.
Some comments by Assistant Treasurer Kelly O’Dwyer and former Assistant Treasurer Josh Frydenberg had not helped the way Australians perceive advisers, Mr Kitchen added.
“I believe when talking about these important issues, we should measure it twice before cutting it, because we only get one opportunity to create a perception and that is perhaps what is lacking in our profession and it is not helped by those attacking it in that regard,” he said.
The discussion between Mr Kitchen and Risk Adviser can be heard later this week with the launch of the latest podcast.
You can listen to previous episodes by clicking here – in this episode, risk specialist and principal of Perera Crowther Financial Services Sam Perera speaks about the Life Insurance Framework and new developments his business will be working on in 2016.
THIS IS REALITY!
I have a client whom I placed Income Protection, Life and Trauma Insurance for in 1996.Unfortunately, due to health in 2001, this client had reason to make a claim on both the Income Protection and his Trauma Insurance policies, both of which were paid out. The Trauma Insurance policy included an automatic Buy Back of the Life Insurance component. This client has recently inherited monies and property, accumulated Superannuation and has no debt and decided to cease paying the escalating Life Insurance premiums and instructed the insurer to cancel the policy following discussions with me prior to doing so.( I did not recommend the cancellation).
I only recently received a notification email from the insurer regarding the cessation of this policy and the email was titled “POLICY LAPSE” !!!!!!
So, if ASIC is to commence gathering “information” from insurers on insurance policy cancellations and “lapses”, we can only assume that as this company’s admin system treats this example as a “lapse”, after 20 years of being in force, never being altered or switched between insurers over that time frame, significant claim proceeds paid when needed and consistent contact, service and advice provided to the client, the information that will be provided will be inaccurate and totally misleading in respect to the assessment of so called churning and lapsed policy data.
This factor should be of grave concern as the true analysis of churning will be hijacked by inaccurate and antiquated administration data that may report instances of policy cancellation as noted in this example as a “lapsed policy”.
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#PerceptionCorrection
I completely agree with you.
Although, I feel that no one could even provide adequate data to quantify the amount of ‘churning’ that takes place. Everyone defines it differently.
ASIC stands by the data in report 413, and the ministers have been looking to that report as gospel. I have no confidence in the next review by ASIC. In fact, I want to know exactly how they will go about conducting their next review. Despite all life offices being required to hand over ‘replacement’ policy data (before the reforms even take full effect!), who is to say what will be defined as churning? How much of the data will they actually analyse? Will it be random? Or targeted?
I have heard that churning only represents 1% of lapses with the majority of lapses due to client economic/affordability and later-year premium increases by the insurance companies. In fact Trowbridge, and the series of Ministers involved have never to my knowledge ever provided any evidence or substantiation for their claims of massive industry churning. How about some journalist talks to APRA and publishes some real stats on churning, because no body else has! Even though the Government seeks to halve our income and double our clawback period on just what they have been fed by the FSC and its insurance company members. How about some proof for a change??