Will Bill place advisers in conflict with insurers?
Advisers selling insurance may find themselves being conflicted by trying to meet the interests of their clients and the demands of their insurers under the Government’s new Design and Distribution Obligations and Product Intervention Powers legislation.
The Senate Economics Legislation Committee has been told that the legislation places monitoring and reporting obligations on advisers and brokers as distributors of policies covered by the Bill that will be controlled by the insurer.
It has been told this will place advisers and brokers in conflict with insurers and may have the effect of reducing the number of consumers seeking personal advice and the protection that comes with it.
The National Insurance Brokers Association (NIBA) said that where an insurance broker is acting for client and not the insurer, this is likely to cause conflicts of interest.
“The costs that will be imposed on our members in complying with the monitoring and reporting obligations required by the Bill are likely to outweigh any benefits the Bill aims to offer to consumers arising from this reporting,” the NIBA submission said.
It said that with other insurance-related reviews currently underway with the potential to impact the new legislation, including work being undertaken by the Royal Commission, the NIBA did not believe it was appropriate to include insurance in the Bill until proper consultation had occurred.
The submission said such consultation needed to involve the industry, the regulators and the Government to identify appropriate and clear minimum obligations in the context of other reforms, undertake a proper cost/benefit analysis and determine an appropriate transition period.
Recommended for you
Policy and advocacy specialist Benjamin Marshan has left the Council of Australian Life Insurers after less than a year, having joined in March from the Financial Planning Association of Australia.
The declining volume of risk advisers meant KPMG has found a rising lapse rate for insurance policies arranged by independent financial advisers, particularly in the TPD and death cover space.
The Life Insurance Code of Practice has transferred from the Financial Services Council to the Council of Australian Life Insurers.
The firm has announced it will no longer be writing new life insurance policies in the retail advised and corporate group insurance channels, citing a declining market and risk adviser numbers.
