The proposed Life Insurance Framework has already hit advisers’ revenues, with half saying they have stopped writing new insurance business in the past year, according to new research from Investment Trends.
According to the Investment Trends 2016 Planner Risk report, which surveyed 620 advisers in June this year, the average adviser has seen risk advice fall from 35 per cent of total practice revenue in 2015 to 28 per cent – its lowest level since 2013.
Several advisers have stopped providing risk advice altogether, with 12 per cent not writing any new risk business in the past year, up from 10 per cent in the previous study.
“The LIF reforms are already testing the business models of financial planners across Australia,” Investment Trends senior analyst King Loong Choi said.
“Not only are they already reporting a fall in risk business, more than two in five planners expect their practice’s profitability to decline if the LIF reforms are implemented.”
About 50 per cent of advisers said they stopped writing new insurance business with at least one insurer in the past year, meaning insurers must solidify their relationships with advisers.
“The recent media scrutiny has triggered planners to demonstrate they are picking the best insurers for their clients,” Mr Choi said.
"In addition, insurers need to grow their brand awareness among consumers because it is easier for a planner to recommend an insurer if the client has already heard of them."
Insurers can improve retention and reduce attrition by being responsive to planners’ needs and keeping them satisfied, the report said.
Some of the opportunities for differentiation include addressing any inefficiencies in the application process, providing planners with great support and improving their brand image among consumers.
“There are great opportunities for insurers to benefit from switching activity, but they also need to be careful to not lose out from this,” Mr Choi said.