BT’s national life insurance product manager, Scott Moffitt, has rejected the argument that the LIF reforms will result in more profit for life insurers, saying there are still areas that need improvement.
During a panel discussion at the AFA 2016 National Adviser Conference in Canberra yesterday, AFA chief executive Brad Fox asked Mr Moffitt what life insurers planned to do with the extra profit they will receive from not having to pay adviser commissions.
Mr Moffitt, however, rejected this claim.
“From our perspective, those changes do not increase the probability of a life insurer,” he said.
“It does actually improve the capital position of a life insurer. We won’t require as much capital because upfront commission in effect represents a form of capital. So that does improve the return on capital that the life insurer will get post LIF.
“But more broadly, there is no additional profit.”
Mr Moffitt added that there are other areas life insurers still need to improve.
“I think there has been a lot of conversation about improving claims management processes. Those improvements are coming in. There is definitely a drive in the market to drive greater efficiency,” he said.
“Things need to be continually be enhanced and focus on how do we get better information out to consumers, how do we help educate them, how do we drive more efficiencies so we can access collectively more people.”
During the panel discussion, APRA member Geoff Summerhayes said the life insurance industry is facing reform because it has “lost is social licence to operate”.
“There's a lot of finger pointing that goes on in the industry and that’s, in my view, unproductive. We need to turn that energy to the stakeholders outside of the industry to win back the trust and confidence,” Mr Summerhayes said.
“There’s no point in tearing the industry apart from the inside because all that will do is bring another layer of government and/or regulatory intervention.”