Cessation of direct life/risk hurts majors

A number of Australia’s major life insurance companies have felt the commercial pain of having to drop or pare back their direct life offerings, according to the latest data released by specialist research house Dexx&r.

What is more, the research house claimed that life companies are becoming increasingly reliant on sales made by aligned and non-aligned advisers providing personal advice to drive new business growth.

Freedom Insurance Group and ClearView were among those companies to cease direct, phone-based sales of life/risk products and according to the Dexx&r data, the industry wrote $1.20 billion of lump sum new business in the 12 months ending December, down 10.4 per cent on the previous corresponding period.

The research house said this was the lowest value of new sales recorded in the last five years.

“Only one of the Top Ten life companies recorded an increase in lump sum new business for the year ending December 2018,” it said. “AIA recorded a 75.9 per cent increase to $108 million from the $62 million recorded in December 2017.”

The Dexx&r analysis said the fall in business could, in part, be attributed to the suspension or cessation of sales of direct lump sum products by several major life companies.

It said that December quarter individual lump sum new business fell by 25.5 per cent to $269 million, $11 million less than the $280 million recorded in the December, 2017 quarter and noted that “with several major retail banks suspending or closing down direct sales of life insurance products, life companies are new becoming increasingly reliant on sales made by aligned and non-aligned advisers providing personal advice for future lump sum new business growth”.


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The same companies which provided incorrect data, under the guise of fixing the churning problem the churning problem they could easily fix themselves, but actually to eliminate the advisers from the sales process so they could sell their JUNK insurance straight to the public. They loved it when ASIC bought (or was paid to believe) their lies. They could now pay us less and could decrease the size of their claims department as their direct junk policies are designed to never pay out.

Now their direct junk policies have been exposed as just that, junk, they need advisers again. But increased costs and regulation, coupled with FASEA and reduced revenue (with the potential of reducing further to zero) means that the majority of risk writers will leave the industry.

After 15+years in the industry (with ADFP and a commerce degree from Melbourne University) im going back to study to advise on insurances, especially when in 2021 the government will likely make our jobs redundant anyway with the removal of insurance commissions.

Insurance advice will still exist after the removal of commissions, however it will only be available through advisers working directly for the product provider under limited advice, or to the the HNW clients getting a wholistic plan.

In the future (after FASEA) no one is going to study 3 years of uni to advise people on insurances. Think about it. Insurance sales person is not a glamerous title. I can almost guarantee that 0.000000001% (the few who had parents in the indsutry might have written this pre 2018) of year 10 students wrote Life Insurance Adviser (or a variant of) on their future career goals form. After studying for 3 years these graduates will only want to deal with the HNW investment customers and will certainly not advise mum and dad clients on insurance as these clients will not be able to pay the $2k + is costs to provide risk insurance.

I dont know what the future of insurance is in this country, FASEA and commission reductions will eliminate the availability for insurance advice and the RC has identified that direct insurance is sub standard and a waste of money. What will probably happen in the short term is Mortgage Brokers will sell insurances (and be paid a commission) and people will have to rely on the junk policies in their industry super.

What will happen without insurance advice is people will lose their homes and the welfare bill will sky rocket. Maurice Blackburn will turn into a trillion dollar company feeding off the misery of sick and dieing peoples' insurance payouts.

I suppose people will get their advice from websites owned by the product providers. Im sure that only the engineers will even read past page 2 of the inurance PDS and the rest of the public (suckers in the eyes of the insurers) will get the cheapest direct policy which has terms like "this life insurance will only pay the benefit if Sadam Hussein re annimates and launches his massive stockpile of chemical weapons at you personally, resulting in your death".

I wish you could buy a Life insurance policy for Life Insurance Advice. It is almost dead. It would probably have an exclusion which reads "will not pay out in the event of insurance company lies and government/ASIC incompetence"

The fall in sales is not necessarily from direct insurance. There is a separate quarterly report on advised sales that is produced for the industry. This shows that in that segment, there is a fall in 2018 of over 10% in new sales (measured in premiums). And that is allowing for income protection sales on rates that are up about 20%. So the number of sales have fallen by nearly 20%. One of the main reasons is the first step in the LIF commission step down from 115% to 80% and a 2 year clawback period. The next step will be to 70% in 2019 and we will probably see another drop in sales. And then again to 60% in 2020. Adding to the woes of insurers will then be the loss of advisers as a result of FASEA, as well as existing advisers being taken out the business to study. So, it would not be surprising to see sales fall by over 50% by 2021 in the advised segment, and even more in direct segments. These are dangerous times for the viability of the life insurance industry at a time that manufacturers are losing money and distributors are exiting ? Adding to this is the black cloud of Labour touting an end of commissions. Could this lead to a collapse of the life risk industry ? That would have dreadful social cosnequences to Australia.

The corrupt cartel FSC members now reaping what they sowed. NO SYMPATHY. Signed All risk advisers.

the comments on this page below should be read far and wide. Australians will be the losers and its sad. There are many that are cancelling polices now because of rampant poor media shows and the attitudes of many in not understanding their actions will result in great pain for their families and its too late by then. New business will go down far further and cancellations increasing. This leaves a pool of insureds who know they need and may have health issues etc and so are likely to claim over coming years. This will put many insurers at peril for their own future. Its very sad indeed and many of us are leaving and I really have not met and adviser determined to remain. Fees for advisers remaining will not have a large base to share with and so for the future, many practices will not run profitably. Its good bye now for many of us.

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