ASIC has released a consultation paper seeking feedback on proposals it hopes to add to the life insurance advice reforms, including asking life insurers to reveal details of their policies and remuneration data.
In response to the government’s draft legislation released earlier this month, ASIC is asking for feedback on its proposal to request certain data from life insurers so that it can “monitor the impact of the reforms”.
This includes requiring life insurers to reveal how many policies are in force and the details of the policies. ASIC also wants access to their remuneration data, lapse rates and clawback amounts.
ASIC hopes to collect this data every six months starting 1 July 2016.
“We may specify in the notice how we would like the information to be provided to us (e.g. electronically),” ASIC said.
“We propose to remove any identifying details before publishing this information or releasing a final report.”
Further, ASIC proposes that from 1 July 2018, if a life insurer adopts an upfront or hybrid commission model, the level of commissions should be set at a maximum of 60 per cent of the premium in the first year.
In addition, an ongoing commission for policy renewals will be set at a maximum of 20 per cent of the total premium paid for the renewal, ASIC said.
Another proposal ASIC has put forward is that if a life insurer pays a commission other than under a level commission arrangement and “clawback” is triggered, then the repayment of commission will be required over a two-year period.
The government’s draft legislation includes the removal of life insurance advice exemption from the conflicted remuneration provisions.
It also allows ASIC to develop a legislative instrument to set out a maximum level of upfront and ongoing commission payments and set out the amount of upfront commissions to be repaid to life insurers.
The consultation paper seeks feedback on the policy ASIC hopes to give effect to in the instrument.
The deadline for comments on the consultation paper is 29 January 2016. By April 2016, ASIC’s instrument will be released and will be effective from 1 July 2016.