The Federal Government’s continuing opposition to commissions being paid on group life insurance will be disastrous for the corporate superannuation industry, a specialist has warned.

Corporate Super Specialist Alliance President Douglas Latto told insuranceNEWS.com.au removing commissions means fund members would no longer receive any advice on life insurance as the adviser would not be able to recover the costs.

“This ban would have a significant effect on life insurance in corporate super funds,” he said.

“We wouldn’t be able to offer advice on claims, policy adjustments and reviews or additional insurance without charging a fee for our time.”

Assistant Treasurer Bill Shorten told the Financial Services Conference earlier this month the Government is looking at commissions on individual life policies again, but ruled out including group insurance in this review.

“While we do charge a fee for administrating a super fund on behalf of a client, this does not cover the individual advice on life insurance, as there are no upfront commissions in group policies,” Mt Latto said.

“Minister Shorten’s statement assumes – wrongly, in our opinion – that group risk is unadvised.

“In fact, corporate specialists provide a range of ongoing advice services which are available to all members of the corporate super plan at all times.”

For the larger advisory practices managing a number of corporate super funds, Mr Latto says they could have hundreds of claims and policy issues being undertaken every day.

“This is what ongoing commissions cover as we are spreading the cost of this advice over a number of years,” he said.

“The alternative will be the adviser withdraws advice from the fund and the member will have to deal with a call centre operator who may have little insurance expertise.”

Another issue for the corporate super advisory firms will be the opt-in proposals.

What this will mean in practice is that if opt-in is introduced, advisers will have to collect the signatures of hundreds of thousands of employees every two years – an impracticable and we believe ultimately impossible task,” Mr Latto said.

“Our members are out in the workplace at this very moment – asking corporate super funds what they would like us to do for their members.

“Our aim is to make sure companies and their employees get the information they need and are looked after properly.”