In its new State of Australia’s Safety Net report, the Council of Australian Life Insurers (CALI) said Australians need more ways to access financial advice as both cost-of-living pressures and mental health challenges are increasing.
Among the top findings in the report, which surveyed more than 5,000 Australian workers, was that the financial advice needs of young people (18–34 years), women, and those in their mid-career (35–54 years) are not being met.
This carried across into their mindset on life insurance, with two-thirds of Australians concerned that cost-of-living pressures will impact their ability to afford it in the future.
“This report shows that rising cost of living, increasing mental health challenges, and global economic shocks are putting intense pressure on Australians. They need someone to talk to about their financial future now more than ever,” said CALI chief executive Christine Cupitt.
“Australia’s safety nets are stretched far too thin, and people are increasingly worried about falling through the cracks. Life insurers have a critical role to play to ensure that doesn’t happen.”
Dr Rebecca Huntley, the research director of 89 Degrees East, the agency that conducted the research on behalf of CALI, added that regardless of age, most Australians aspire to be more financially resilient and “this is only becoming more important for them in a cost-of-living crisis”.
“Higher living costs and the uncertain economic environment have led to increased stress levels and concern about mental health in our community,” said Dr Huntley.
“People know that mental health challenges can have a lasting impact on their personal finances due to time off work and the cost of accessing treatment and support.”
According to CALI, other than the federal government, life insurers are the “largest provider of financial support for people experiencing mental health concerns”.
The research also found that Australians are more likely to turn to family and friends for help or seek government assistance payments than look to their life insurer for help in the event of a mental health challenge.
Indeed, only a third said they would talk to their insurer for this assistance, despite almost 90 per cent of Australians responding that they think it’s important they’re able to access financial support through their life insurer in this situation.
“This report highlights that Australia’s life insurers provide a fundamental safety net and pathway for people to secure their future, no matter what happens throughout their lifetime,” said Cupitt.
“We have an advice accessibility crisis in this country. In the past three months alone, almost a third of Australians considered seeking financial advice on life insurance, but just 8 per cent actually received it.”
CALI also used the report findings to reiterate its stance that there is a “critical need” for the passage of the upcoming tranche two of the Delivering Better Financial Outcomes reforms, specifically pointing to the ability for life insurers to “provide simple advice on their own products when customers ask them to”.
“This report shows that young Australians, mid-career workers, and women in particular want to learn more about what’s out there to help protect them,” Cupitt said.
“They’re under pressure at work and at home, they’re worried about the cost of living, and they’re intrigued by the possibility of safety nets to increase their financial resilience and overall wellbeing.”
Isn’t it about time we had some evidence of real journalism at IFA. It’s not good enough to just repeat verbatim the press release coming out of CALI.
Forget the platitudes, and drill down. Please ask CALI why there has been constant GOUGING of existing policyholders to make up the new business premium missing following the imposition of LIF.
Now the insurers that constitute CALI still find they need more premium revenue coming in, preferably without commissions. So CALI have jumped on the bandwagon now being provided by Mr Jones to assist his mates in the industry funds. Now we can watch ” advised” business, still in responsibility period, being lapsed with a clawback when a client rings about COST. And watch all those CRAP direct-selling products of yore get a re-run
Yet no one is asking CALI why their members are gouging out existing policyholders and then wondering why those policyholders that CAN leave, are going elsewhere for their insurance and reducing sum insureds. That’s self-inflicted damage.
But wait, those insurers also get a second crack at the revenue cherry. New business is now being plagued by what the actuaries refer to as Duration Based Pricing, which to the rest of us means up to 30% discount on first year premiums for new life risk IP business, where the discount is clawed back on the client from year three onwards. Biggest offenders on IP appear to be MLC & Encompass and Metlife.
Eighteen months ago ASIC promised a review of pricing. Yeah right – I’ll believe it when I see it.
This solution is blindingly obvious but as they say, there is no appetite right now.
Go back to the government and tell them LIF has been a total and abject failure and should be repealed.
Standing by to watch the flying pigs blot out the sun at sunset
Come on IFA, do your journalist job!!
Meanwhile, mortgage brokers are still picking up 0.798% $7,980 upfront and 0.22% $2,200 trail, on a $1,000,000 loan churn, but according to our FS Minister and Treasury, Insurance is only worth 0.66% (and strictly new business). And they all wonder why nobody with any commercial acumen is interested in writing Insurance…
If I had my time again I’d choose mortgage broking over financial planning. Perfect business model…..get paid for the initial transaction and then receive an ongoing payment for doing nothing for the life of the loan. The best bit, the client’s not paying anything, so they love you because it’s a free service. It’s actually not even possible for a broker to provide an ongoing service as they don’t have access to the loan info after settlement. No FDS, ongoing advice, ROA’s, fee consents, you literally do nothing. Then when the client contacts you to refinance or extend their loan, you just switch them to another lender and start the process all over again. You could easily build a trail book of hundreds of thousands of dollars in a matter of a few years.
and CALI successfully had commissions reduced and look how that turned out….great researchers, so why not listen to them. I suppose the bosses are still getting big fat bonuses.
“LEVEL” premiums were pitched to advisers for YEARS & YEARS as “premiums don’t change but for CPI”, yet most providers have been rocketing these up in lumps like MLC’s recent ~20% hike. No wonder people are reducing cover or cancelling policies!
Many CALI members created the problems with the insurance industry today. It is all about reduced premiums to be competitive then increase the premiums when unprofitable.
What he/she said!
No, the insurance industry is dead here as the insurers keep reducing new business premiums to compete with each other, whilst at the same time shafting all the existing clients. For example MLC 16% increase in level premiums for IP for the existing loyal clients that have supported the products for years and years. These customers get upset seeing all the new business discounts and rightly so, most cant rewrite due to health so they are stuck with these ever increasingly expensive polices.
In the past I would try to keep the business however why should I talk my clients into keeping insurance that is only going to get unaffordable due to insurers only knowing one way to keep in business? By jacking up premiums for existing clients. This isn’t sustainable! So why put your clients into a unsustainable ponzi type product, with no knowledge of what and when the increases above base premiums will be.
The sustainable way as we all know is to raise new business premiums across the board, but no lets reduce those and see how far we can push the existing clients till they lapse. Stupid!
So this is no ones fault except the greedy insurers and the general managers that work for them with their short sighted 12 monthly bonus payments based on new business
They only have themselves to blame.
Set the targets not on new business however preserving existing business and maybe the insurance industry can be brought back to life, however with all the self interested profit maximizing executives running it ,I highly doubt it, they are all too greedy.
100%. I dont write much insurance these days, but I have now also given up arguing with clients about the need to retain existing policies. Most of my book was written on level premiums to provide certainty and avoid large jumps, yet this is exactly what the providers have been dishing out lately. My book is now in steady decline as I happily help people move to stepped cover, reduce cover or cancel policies. I cannot justify arguing why a 20% jump on a level premium ‘makes sense’. It’s disgusting and as you say, it’s just another case of big business worrying more about the new policy metrics for the sharemarket press release than retention. Same thing happens with banks, enbergy companies, phone companies, etc. It’s all smoke and mirrors for the analysts and no care about longstanding clients.
Totally agree. What price is loyalty really.
I am the same, it breaks my heart what the risk industry has become and how much premiums have increased, especially level.
Level has become the easy target.
Same for me. There’s a lot of talk about the decline in insurance advice being due to advisers being forced out by higher education requirements. While that may have removed a few of the older insurance specialists, there are still thousands of advisers who are fully educated and licensed to provide insurance advice. They just choose not to anymore, because it has become too much pain for too little gain.
Agree with all the above. Absolutely disgraceful what they have done to existing customers. Clients are now stuck paying exorbitant premiums as a result of the level premium lie sold to Advisers. Stepped is no better either, except at least they haven’t been paying the higher premium all these years. Just keep helping them with the cancellation paperwork. I will also not recommend new insurance anymore as I know they will not be able to hold it long term due to affordability so what’s the point.