Parliamentary Inquiry into Life Insurance
On 27 March 2018, the Parliamentary Joint Committee on Corporations and Financial Services released its Report on its inquiry into the life insurance industry.
The Committee’s recommendations include:
- Financial Adviser audits – ASIC conduct random audits of 20 per cent of the life insurance adviser population over a three year period, with audit findings to be published by ASIC and on adviser websites.
- Remuneration, commissions, payments and fees – ASIC and APRA conduct detailed examinations of all payments, benefits, and fees across all sectors of the life insurance industry and that the government consider further regulation following the results of those examinations.
- Life insurance codes of practice – prior to seeking ASIC approval, the two codes of practice for the life insurance industry be combined into a single code of practice if possible.
- Approved Product Lists – the life insurance industry should have, as a matter of urgency, a balance of affiliated and non-affiliated products on their approved product lists, and if affiliated products are recommended, the affiliation should be disclosed, and the customer should be given a comparison with non-affiliated products. The industry should transition to open approved product lists. ASIC and the ACCC jointly investigate whether the past use of APLs in the life insurance industry breaches any anti-competitive laws.
- Claims handling – the life insurance industry must:
- regularly update all definitions in policies to align with current medical knowledge and research;
- standardise definitions across all types of polices and use clear and simple language in definitions;
- set industry standards for claim timeframes and limits on the number of medical examinations;
- clearly explain which associated conditions that may arise from the initial condition, including mental ill health, are covered by the policy; and
- develop a mandatory and enforceable Code of Practice for its members in relation to mental health life insurance claims and related issues.
- Access to medical information – the Financial Services Council and the Royal Australian College of General Practitioners collaborate to prepare and implement within 6 months, agreed protocols for requesting and providing medical information.
Life Insurance Remuneration Reforms
FPA Life Insurance Blueprint
FPA Life Insurance Advice Guide
We are always keen to hear your valuable feedback and suggestions. Please let us know if there are any policy issues or concerns that affect you.