Insurers questioned over premium hikes
After receiving letters from a "number of top insurers" warning that premiums are set to increase, Life Insurance Direct chief executive Russell Cain has questioned whether the insurers are "price gouging".
Mr Cain said that all of the insurers he has received letters from cited "sustainability" as the reason behind the premium hikes.
However, since advisers are soon to take a reduction in how much commission they are paid, insurers should look to reduce premiums, not increase them, he said.
"This leads us to question whether life insurers are price gouging," Mr Cain said.
Lower commissions, coupled with increases in premiums, will ultimately improve the insurers' bottom line, he added.
"It's certainly not in the best interests of consumers and neither does it help maintain the sustainability of the thousands of small financial advice businesses, which provide the real human connection that clients and claimants so desperately need," Mr Cain said.
"We believe this is an attempt by some of the insurers, many of whom are owned by the major banks, to continue to push consumers into their own direct products.
"Consumers who buy direct policies may pay as much as 100 per cent or more for life insurance products than those who take up policies offered via advisers," he said.
Mr Cain, along with a wider group of advisers and dealer groups, is conducting a survey for advisers to determine the likely effects of the Life Insurance Framework. If you would like to participate in the survey, you can find it here.
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