Super Consumers has urged the disclosure of the actual commissions paid by insurers to advisers.
In October, the Australian Prudential Regulation Authority (APRA) unveiled a discussion paper outlining the Insurance Data Transformation (IDT) project. The initiative seeks to gather data facilitating a more comprehensive evaluation of prudential and conduct risks within the insurance industry for regulators, policymakers, and insurers.
Currently, APRA said, there are “insights gaps” that limit the data’s usefulness and inhibit the “strategic drive for data-enabled decision making”.
In response to the discussion paper, Super Consumers and the Financial Rights Legal Centre issued 12 recommendations in a joint submission, urging a closer examination of over and underinsurance in superannuation as part of a broader independent review. They emphasised the significant impact of insurance within super, costing Australians over $6 billion annually.
Additionally, the pair called for clarity in the objectives of the IDT project, specifying that the data holds significance for consumer advocates similar to ASIC, and advocated for the publication of insurance claims and disputes data at the super fund product level by agencies.
However, in a request that could impact advisers, Super Consumers and the Financial Rights Legal Centre have asked APRA to consider enhancements to the commission data table to include actual commissions paid by insurers to advisers.
“The additional product-level information that should be included is: number of advisers paid commissions by insurers, amount paid in upfront commissions, and amount paid in trailing commissions,” the submission reads.
“This would provide greater insights into the costs of selling insurance in different channels.”
The consumer advocacy groups argued that this would provide better insights into the reality of people’s experiences when making claims on their insurance.
Last week, ifa published the submission addressed to APRA by the Financial Advice Association Australia (FAAA) in which it said that the advised life insurance sector is in crisis.
Among other things, the FAAA said given life insurance is “ultimately about getting benefits to those policyholders (or their families) who have suffered a major injury or illness”, there should be greater insight into the percentage of premiums that end up in the hands of claimants.
“There can be natural leakage from this system through the costs experienced along the value chain, some of which are well understood, however, others are largely unknown,” the FAAA said.
“Financial advisers largely do not charge for the management of claims, unless the claim is particularly complex. There are other stakeholders who do play a role to assist claimants, and can charge a significant amount for this service.
“We would support the collection of data on what percentage of the benefit is paid to a third party when a third party is involved.”
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