Cessation of direct life/risk sales hits bottom lines

New data has revealed the impact of Australia’s major life insurers ceasing sales of direct product products with industry recording a 14.5 per cent decline in new business for the 12 months ended September, 2018.

The data, compiled by specialist research house Dexx&r revealed the industry wrote $1.20 billion in new business for the period, down 14.5 per cent on the $1.40 billion recorded in the previous corresponding period and the lowest level reached in the past five years.

It found that only one of the top 10 life companies recorded an increase in lump sum new business for the year ending September, with AIA recording a 62.9 per cent increase to $100 million.

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.

The Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry heard a range of evidence with respect to direct life insurance sales, with ClearView having ceased the business before the commission began and with TAL and Freedom subsequently suspending their activity.

The Dexx&r data revealed that September quarter lump sum new business fell by 16.8 per cent to $343 million and noted that with the closing down of direct sales of life insurance products, companies were becoming increasingly reliant on sales made by aligned and non-aligned advisers.

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The FSC have well and truly got it wrong. They thought the LIF would drive more direct junk business and that's now fallen and advisers new business is about to fall off a cliff thanks to the same LIF and FASEA. Unless they fix the LIF its going to be goodbye to them too and no sympathy there.

Wafter all these problems with direct insurance and insurance provided under general advice, I cannot understand how the government and industry bodies think that the direct and unadvised insurance process is better and produces better results for customers than the full advice process. Even if an unscrupulous full advice adviser cancels a policy which is better suited than the new policy at least the client will be protected by all the laws governing the Adviser such as the best interests duty and the new policy will be underwritten.

Why are they trying to eradicate FULL ADVICE from the insurance process by making us jump through all these compliance and training hoops when general and unregulated advice from untrained sales reps is the real problem.

Oh thats right, they are all working to their own agenda (or the agenda of their corporate/union donors) and dont actually give 2 hoots about the outcomes for clients.

I await with great interest and anticipation the fall out and class actions against all the dealer groups allowing their advisers to ruin the lives of people by allowing insurance to be sold under general advice with no client protection what so ever.

Reap what you sow FSC.
No sympathy here. LIF, the one off exam and FASEA will eradicate this once great industry as advisers choose to retire, change occupations or get kicked out because they can't pass the exams. Risk versus reward is no longer worth it.

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