Affordability and cost challenges, along with product design, are among the key issues facing the life industry after it finished the 2021/22 financial year with a profit of about $500 million, a KPMG webinar heard. 

NobleOak Life Insurance CEO Anthony Brown, who was on the webinar panel, says the industry needs to “get back to the basics” and focus on customers by offering better products and also looking at its cost base. 

He says he is “quite optimistic” about the Quality of Advice Review – which is expected to hand its final report to the Government by December 16 – and what its proposals would potentially mean for the industry and the advice distribution channel. 

“The aim of the Review is of course to make life insurance more accessible and affordable, but also the quality of it to be better and the definition of good advice to be clearer, and simpler to implement,” Mr Brown said. 

“And if we can get halfway where we’d like to get to, that would be a wonderful step forward.” 

The Review in its proposals paper has recommended broadening the scope of personal advice and creating a “good advice duty” to replace the existing “best interests” obligation. It has also backed keeping life commissions exempt from the ban on conflicted remuneration. 

Mr Brown says the industry needs to be “remunerated for providing good advice but that remuneration conflict has to be really well managed as well and the customer has to be well off out of the transaction”. 

He says the cost of administrating advice is “just ridiculous” and needs to change. 

“From what we’re reading and seeing at the moment, all of those will be addressed, and they’ll be addressed in a really positive way,” Mr Brown says of the advice review. 

“And so I’m optimistic that there’ll be good outcomes, and whether you sell through advisers or super or direct or other channels, you want a really strong advice model. 

“You want customers to be able to access quality insurance. You want the reputation of life insurance to be restored. You want an active market, and you want people to get the cover that they need when they can so we’re really big advocates for change in there and stimulating that adviser market.” 

TAL Group CEO Brett Clark, who was also on the webinar panel, touched on affordability and how a shrinking pool of insureds have played out in the market. 

“One of the central issues for the industry, and we've touched on it in a few different places in this conversation… is fewer customers are insured,” Mr Clark said. 

“And those that are, are paying more and this goes to this point directly around the affordability of premiums. Ultimately that picture of fewer customers being insured and those that are insured paying more are not the ingredients for a healthy and sustainable industry.” 

He says in the medium to long-term the industry needs to look at the affordability question but ultimately, the bigger picture issue is one of fewer customers being insured. 

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