Govt urged to reconsider life industry reforms
A risk adviser has written to the Prime Minister, urging him to reconsider Assistant Treasurer Josh Frydenberg’s proposed reforms for the life insurance industry.
In a letter addressed to Prime Minister Tony Abbott seen by Risk Adviser, Perera Crowther Financial Services director, Sam Perera – who previously wrote to Mr Frydenberg before the reforms were announced – urged the government to consider who the “true beneficiaries” of the reforms would be.
“It is my belief that those complicit in authoring the report do not represent the majority view of the advice industry and as such must have formed their views under considerable duress from forces with agendas that do not align with the best interest of consumers and taxpayers,” he wrote.
Mr Perera also argued that ASIC Report 413 – the report that sparked the formation of the Life Insurance and Advice Working Group and subsequent Trowbridge Report – provides both “recent and empirical evidence” that commissions are not always conflicted.
Quality advice is provided to consumers 93 per cent of the time when hybrid and level commission structures are used by advisers, Mr Perera said.
“The question remains, why are the other commission structures being meddled with if they are proven by the regulator to work?” he asked.
Also, citing research conducted by The Risk Store – which found $4.9 billion in claims was paid to Australians in 2014 – Mr Perera expressed how important risk advisers are to reducing financial strain on the government and the welfare system.
Referring to the number of claims paid during 2014 for income protection, which The Risk Store found to be more than $1.4 billion, Mr Perera said had their provision been left to the government it would have put pressure on the federal budget.
“Given the strains on the federal budget and forecast deficits, this is a cost the government can ill afford,” he said.
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