TAL and the Council of Australian Life Insurers (CALI) have flagged that, while the government’s initial response to the Quality of Advice Review (QAR) holds promise, there remains more work to do for consumers, such as allowing life insurers to provide limited life insurance advice.
Among other recommendations accepted as part of stream one of QAR reforms, the government would introduce written consent requirements for consumers before they purchase an insurance product that will result in a commission payment. It would also allow superannuation funds to provide advice to their members.
With almost 10 million Australians holding life insurance products through their superannuation, CALI said it supported reforms that would allow super trustees to provide advice to working Australians, including about life insurance held within their super.
It also called for legislation to allow life insurers to provide limited advice to Australians directly when they ask for it. In his formal response to the QAR report, Minister for Financial Services, Stephen Jones, had stated he would explore super funds giving advice and, if it was successful, then he would consider expanding it to banks and insurers.
“Life insurers support people to make informed choices about their future so they can live in a healthy, confident and secure way over their lifetime. Life insurance protects workers and their families on their best and worst days,” said CALI chief executive, Christine Cupitt.
“This announcement is a good start but more needs to be done to help solve the unmet financial advice need for working Australians, not just those people approaching retirement. We must address the growing problem of underinsurance that is leaving people unprotected when times get tough.
“For many Australians, getting advice is too expensive or too inaccessible with just 16,000 financial advisers to turn to across the country. Of these advisers, there are just 1,000 who are helping people navigate life insurance products, which makes reforms for life insurance advice an urgent priority.”
With appropriate limitations and strong consumer protections in place, CALI believed the law should enable life insurers to provide limited life insurance advice where a consumer do not wish to engage a financial adviser.
“Australians shouldn’t be waiting in line to pay $3,500 on average for financial advice, especially when life insurers want to be able to provide limited advice about their products to help people make informed decisions about protecting their future,” Cupitt said.
TAL also welcomed the removal of onerous red tape by streamlining the documentation process for advisers and the decision to expand access to advice through super.
It said it looks forward to engaging with government and stakeholders towards advising consumers on their policy options as part of stream three reforms.
“Implementing stream three reforms would allow customers to engage more fully with their life insurer to ensure their insurance is fit for purpose, as their needs change, and against the backdrop of increased cost-of-living pressures,” TAL said.
Brett Clark, CEO and managing director at TAL, highlighted the opportunity with the QAR to better support life insurance outcomes for customers.
“CALI welcomes Assistant Treasurer Stephen Jones’ acknowledgement of issues raised in insurance and the government’s willingness to work with the life insurance industry on potential reforms to include life insurers in legislative change on financial advice,” he said.
“We look forward to continuing our work with the government to find a solution that gives more Australians access to life insurance advice by making it easier for life insurers to provide assistance and guidance about their products.”