Why do life insurance commissions need to stay?

From

Brett Wright

A recent report released by life insurance specialist Brett Wright, has shed some light on the life insurance commission debate, from an advice practitioner and consumer point of view.

In his report, Wright articulates the value advisers deliver when providing life risk advice, how consumers fair in a commission vs. no commission world, why an advised life insurance consumer is better off and why 90-95% of people would not be willing and/or able to access life insurance advice and better value advised policies, if commissions were banned.

Wright commented, “With the government, opposition and regulators continuing to say they may support a ban of commissions, I wrote this report with the sole purpose of starting open, honest, transparent and fact based conversations with politicians, regulators, life insurers, associations, licensees, advisers at the coal face, and most important of all, the consumers we serve.

I think most advisers understand the government wants change, and most of us want change too. However, the changes need to be well informed, financially viable and drive simplification and innovation in the sector, so the industry can provide a faster, fairer and better experience for all Australians, instead of adding more and more red tape, suffocation and increased costs for all.

The report is not trying to argue life insurance advice should be solely funded by commissions. I believe there is room for fee for service (FFS) and the consumers who want and/or can afford FFS, can access this option already. But FFS should not be the only option and it is essential consumers maintain their right to choose between the commission and FFS models, and decide which is best for them.

I’m totally frustrated with the lack of direction in life insurance and advice, and it is safe to say that most advisers and their clients are at their wits end too. Working closely with my own clients and also seeing how other advice businesses (large and small) help their clients every day, I still can’t fathom how or why we are still sitting here questioning the value of life insurance advice and commissions, when advised clients who fund their advice through commission, generally have access to better benefits, better premiums, better claims services and have cover that is fit for purpose, when compared with outcomes if they tried to DIY.”

The life insurance sector is at a critical point in time. The main goal and focus for all stakeholders, needs to be ensuring life insurance advice remains accessible and affordable to consumers, and remains profitable for advisers – without these two things, advised life insurance dies and a collapse of life risk pools will follow.

Wright’s report has been supported by key industry leaders such as John de Zwart CEO NEOS Life, Michael Pillemer CEO PPS Mutual, Wayne Handley MD Bombora Advice, Helen Blackford CEO Lonsdale, Millennium3 & IOOF Alliances, Don Trapnell Director Synchron, Nettie Handley Life Insurance Advice Advocate and Ben Donald Adviser and Director Austbrokers Financial Solutions.

Read the report.

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