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Restoring confidence and trust in the industry

The new life insurance reforms are positive changes that need to be made to strengthen our industry for the future, but this is just the start.

The recently announced changes to the life insurance industry have been driven by the need to put the consumers’ best interests first and to regain community trust in the life insurance industry. 

Since the release of the independent final report prepared by John Trowbridge and the ASIC investigation, the life insurance industry has been challenged to come together and address the many complex issues raised. 

Key recommendations of the Trowbridge Report in the wake of the ASIC investigation revealed higher lapse rates and high upfront commissions directly correlated to poor advice, and misalignment between incentives and distribution channels. This clearly is not reflective of all advice or advisers and is a case of the few versus the many. However, it is clear that a correlation between high commissions, lapse and perceived poor advice exists. Therefore, the industry needed to act and do so quickly.

The recommendations were founded with a view to increase the quality and sustainability of the industry and are reflected in the reform model. 

What was made clear from the start was that industry had one last chance to find a way to make acceptable change. If we were going to achieve any meaningful change as an industry, we needed to reach a consensus between advisers, customers, clients, insurers, regulators and government. Consensus was critical to achieving an outcome. 


The recently announced reforms are an important step in providing clarity on an industry-led response to the recommendations. But more importantly, they are an important step towards rebuilding confidence and trust in a sector that has been lost in recent years.

At the heart of these discussions has been the need to reach agreement on how we can ensure a sustainable advice industry which supports access to quality independent advice and adequate life cover for all Australians. 

For consumers, we believe their best interests are served by having a robust market that supports choice, access to quality advice, independence, innovation, competition and value. We believe the reforms support these interests. 

We believe these are positive changes that need to be made to strengthen our industry for the future, but this is just the start.

We need reform that enables us as an industry to move forward to address the other key recommendations of the Report. These include measures to support choice on Approved Product Lists, the introduction of a code of conduct aimed at setting standards of best practice for insurers, licensees and advisers and improved reporting for the industry.

These broad structural changes will have a significant impact on our industry and in particular advisers, so support from life insurers for advice partners will be critical during this time of transition. 

The changes proposed will require industry to review the whole offering including product design, structure, process and systems and we expect to see significant changes in each of these areas. 

It has taken us as an industry a while to get to this point, but we believe that a partnership approach, now more than ever, will be paramount to achieving a successful and sustainable industry for the future.

Damien Mu is chief executive officer of AIA Australia


Restoring confidence and trust in the industry
Damien Mu
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