On Thursday, the Council of Australian Life Insurers (CALI) expects the government to make an announcement concerning reforms responding to the Quality of Advice Review (QAR).
“We understand that the government will make some remarks about its response to the Quality of Advice Review report,” said Christine Cupitt (pictured above), CALI’s CEO to Insurance Business.
Michelle Levy’s QAR report recommendations aim to improve the accessibility and affordability of quality financial advice. Financial advisers, super funds and life insurers were a main focus. However, this review and the government response also impact insurance brokers and the commercial insurance industry.
On the eve of the government’s likely announcement, CALI called for life insurers to be able to give “limited” financial advice.
“What we’re talking to the government about is more options for life insurers to provide limited advice about their own products to the people who ask for it,” said Cupitt. “We think this is a really important piece of the puzzle in getting more accessible financial advice to more Australians.”
CALI released the findings of research conducted by the agency 89 Degrees East that it said support its view. According to a media release, “the number of people who actually receive professional advice remains low.”
The release also said about one third of Australians “lean on their loved ones to tell them what to do about their life insurance cover rather than speaking to their life insurer or getting advice through their superannuation fund.”
“What this all boils down to is that people want somebody to talk to, to ask sensible questions and receive limited help and support in making decisions around their life insurance,” said Cupitt. “We really think that life insurers are well placed and stand ready to help their customers navigate their decisions around life insurance.”
In light of the well documented issues around life insurers and their advice investigated by the 2019 Hayne Royal Commission, IB asked how life insurers would make sure any advice they give is in the best interests of customers?
“Our research has also found that 90% of Australians are satisfied with the interaction and service they get from their life insurance provider when they deal with them directly,” said Cupitt. “There is a high degree of confidence around the work that we do with our customers now.”
The CALI CEO said better customer outcomes are “absolutely at the centre” of their proposal together with “appropriate guardrails and controls that sit around any advice provided by life insurers.”
IB asked if CALI will provide extra training for life insurer staff tasked with advising customers?
Cupitt said life insurers “are thinking deeply” about how their advice can be “safe and appropriately controlled.”
She said CALI has talked to the government during the last six months about a range of measures. Those measures include minimum education standards for those giving advice, minimum quality assurance requirements, testing the quality of advice, compliance monitoring and supervision obligations over staff providing advice.
“We do absolutely agree that there needs to be a full package of consumer protection that sits around this,” said Cupitt.
From a wider industry standpoint, Cupitt said her industry sees three ways Australians of the future should be able to access information, advice and purchase life insurance.
“One is through a holistic financial plan with a fully qualified financial adviser,” she said. “Another is through their super fund trustee, where they can get advice about the default insurance that’s available through their fund and potentially topping that up.”
The third way, she said, is through the life insurer.
In August, the Australian Financial Complaints Authority (AFCA), said the previous year was a record year for consumer complaints across the financial services sector. Delays in claims handling were a major reason.
However, in this AFCA report, life insurers stood out for an improving record.
“Pleasingly, according to AFCA’s complaints data, consumer complaints in relation to life insurers have dropped 24% compared with FY22,” said a CALI spokeswoman in statement.
“This decrease coincides with the substantial investment the life insurance industry has made in improving internal processes and practices ahead of the commencement of the Life Insurance Code of Practice (Life Code) on July 1, 2023.”
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