It’s no secret that Australia has an underinsurance problem, but while advisers are critical to solving this, insurers recognise the significant time constraints advisers are grappling with.
Speaking to ifa on Tuesday, Adam Crabbe, risk strategy specialist at Zurich, said the Quality of Advice Review (QAR) has the potential to reduce the current workload carried by advisers.
“Advisers are time-poor, so I think if there’s a way that perhaps, with QAR, if there’s an ability to reduce the workload that’s required, I’ve no doubt that that will certainly help existing life insurance advisers, but potentially others that are looking to maybe reignite their interests in life insurance advice to maybe do just that,” Mr Crabbe said.
“Because with that reduced complexity, it’s a reduced cost to serve, so there’s perhaps a greater willingness to re-enter.”
Last week, the government published the first tranche of legislation in response to the QAR. In it, the government presented draft law for recommendations 13.7 to 13.9 which relates to obtaining consent for life insurance, general insurance, and consumer credit insurance commissions.
Unsurprisingly, the draft legislation proposes to retain all of the current caps on commissions, such as the 60 per cent upfront commissions and 20 per cent trailing commissions, with a two-year clawback for life insurance. Moreover, it also seeks to enshrine in law the requirement for advisers to seek one-off consent from their clients, in writing, to receive a commission.
According to the draft law, the long-term goal of this recommendation is to work in concert with the rest of the reforms to incentivise the provision of risk advice through fees and reduce the reliance on commissions.
Touching on these recommendations and their inclusion in the first tranche of legislation, Mr Crabbe said that by improving the “efficiency piece”, an area advisers find “very labour intensive”, the burden would be lessened and the onus taken off commissions.
“I know for many advisers, a higher commission would be ideal, but I think that in itself … the efficiency piece is critically important,” Mr Crabbe said.
On the topic of encouraging more advisers to re-join the risk industry, Mr Crabbe said insurers play a key role especially when it comes to improving efficiencies.
“We’ve invested really heavily in that digital aspect, really trying to make that whole job of advice much more fluid and easier for advisers, but there still remains complexity in products,” Mr Crabbe said.
“I think for many licensees, they’re still working through the compliance element, which often becomes an increased workload which leads to an increased cost which for many consumers, there’s perhaps a reluctance to want to pay and that’s not necessarily new.”
He highlighted Zurich’s dedication to advice and noted that “advocating for advisers” is one of its “core strengths”.
“For us, advice remains core,” Mr Crabbe concluded.
1. What’s now easier with QAR?
2. Insurers have such poor admin that it’s next to impossible to provide any advice at a profit. The delays in quotes, the constant need to follow up, the errors in implementing client policies will drive every adviser who tries risk broke again.
The vast majority of Life Insurance companies other than Zurich and ClearView openly supported the reduction in commission and the extension of the clawback period during the LIF debate…..along with the FSC and every other unimportant consumer group sticking their grubby noses into a space they had no understanding of.
They have delivered a resounding failure for themselves, their previously loyal and supportive advisers and the Australian public seeking professional and personalised risk insurance advice.
Well done to those companies who were prepared to burn those who supported and provided quality insurance business into their pools resulting in adequate reserves available to retain premiums and to pay future claims expenses.
You have failed.
He highlighted Zurich’s dedication to advice and noted that “advocating for advisers” is one of its “core strengths”.
Until that advocacy includes an increase in initial brokerage to 100% + GST with ongoings to 10% + GST and a decrease in clawbacks to 12 months nothing will change as most advisers are simply not interested with the unprofitable & broken post LIF model.
Stopped reading after no change to commission and no change to claw back! Maybe get Ken Hayne to sell your shitty products!
loved that comment Steve !
Nope. Reverting to pre lif would help, slowly. Qoar will do stuff all except maybe sell more junk industry fund group cover.
If a higher commission payment would be ideal for many advisers, then Zurich and every other Life Insurer should therefore deliver a united front to Minister Jones and DEMAND that the levels of remuneration be increased back to a minimum of 100% Upfront and a minimum of 15-20% renewal in addition to a 1 year clawback period.
Until then, nothing positive will change and the Advised life Insurance space will continue a downward spiral.
Advisers are not only time poor. They are now still remuneration poor. Therefore they abandon risk work and either do more finamcial work, or tjeu just exit.
Can he please explain what has changed to make risk advice easier to provide? If anything the QAR as currently put forward makes it slightly harder. In my view Zurich is mostly chasing general advice, which actually isn’t advice, in order to maintain some level of new business. They are on a ship that is sinking fast.
The insurers heavily discount the first two years of premium to reduce the commission paid to advisers to do the work. Their service to advisers is then poor. So save us the usual corporate sales people from insurers telling advisers how they are there for them!