Industry joins forces to address insurance issues

John Brogden

John Brogden

Industry associations representing advice and life insurance will form a working group to address the issues raised by the ASIC report into life insurance released yesterday.

The Association of Financial Advisers (AFA) and the Financial Services Council (FSC) will jointly convene a working group to specifically address retail life insurance product structures and distribution practices. An independent chair will be appointed to convene the working group and facilitate industry and policy solutions.

John Brogden, CEO of the FSC said: “It is critical that remuneration models in the life insurance industry are sustainable and practical for consumers and the industry.”

“The ASIC report requires a serious response from the industry. We have formed a working group to achieve this,” Mr Brogden said.

“The working group will consult with the regulators and Parliament on its solutions.”

“The financial advice and life insurance sectors will work together to carefully examine the findings and recommendations in the ASIC report and to assess all options to improve market practices and sustainability.”

Mr Brogden said the working group will produce an initial report on its findings within two months and a final report early next year.

“As an industry we will review the ASIC report and provide a considered response.  We note ASIC will take enforcement action,” he said.

“Consumer trust and confidence in financial advice and products is essential to ensure Australians have sufficient life insurance cover.”

“Australians are chronically underinsured. Life insurance helps protect Australians against the social and economic impact of premature death, illness, injury or disability that impacts their ability to earn an income – arguably the most important financial asset a person has.”

“The contribution of private life insurance will be critical for the Australian economy as our population ages and workforce declines.”

Mr Brogden also said: “In recent years, policymakers have treated life insurance in a bipartisan manner.“

“The ASIC report notes: The FOFA reforms did not extend the ban on conflicted remuneration to individual life insurance sales under personal advice. That is, commission payments for life risk insurance products (with the exceptions in paragraphs 42(a)–42(b)) are exempted from the ban on conflicted remuneration.”

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