The proposed life insurance clawback rule should pose no problem if advisers have won clients’ trust, according to the MD of adviser practice Mr Insurance.

“At the first meeting with the client we talk about the annual review process as part of the ongoing service,” Peter Byrne told an Association of Financial Advisers life insurance roadshow in Melbourne last week.

“The important thing is to invite them to take part in a review.

“We send an email and will chase if we have no response. If they say they don’t want a review, that has met the compliance requirement.”

Mr Byrne says if a client agrees to a review, they are part of the decision-making process and less likely to cancel their policy.

A client must sign a letter agreeing to cancel a policy, and that also can act as a deterrent.

“It is easier to keep a client than go and find a new one,” he said.

“We have mining clients and they are finding it difficult to maintain a policy. But if you can help the client, with things such as premium holidays, they will stay with you.”

Russell Collins from advice consultancy Risk Insurance Communications Skills says clawback can be countered by obtaining a commitment from clients.

“I feel the furore about clawback is misplaced,” he told the roadshow. “Advisers should be trained to retain clients, rather than just winning new business.”

Mr Collins says a relationship begins at the first meeting, which is not about selling products.

“The first meeting is about building a relationship through empathy,” he said.

“It requires you to listen from the heart, rather than from the head. The adviser should develop penetrating questions and then listen closely to the answers.”

Mr Collins says these answers should be included in a file note, which is sent to a potential client to check for accuracy before the next meeting.

“I tell the client the file note will be used as the basis of the strategy meeting.

“By inviting comments from the client, I am engaging them in the process and they become part of the decision-making process.”

At the second meeting, budget constraints should be addressed and agreed.

Without these, advisers are wasting their time, Mr Collins says.

“By keeping within the budgets, I converted nine out of 10 prospects. I was going with what they really wanted from insurance and what they could afford.”

He says having built such relationships, he cannot envisage a client wanting to lapse their cover.

“Having agreed a budget at the review, it would be unlikely they would say they couldn’t afford the cover.

“If there was a question about dropping their cover, I would produce the file note they had agreed and ask if something had changed. Most times it hadn’t, so the cover remained.”

Mr Collins tells clients that premiums cannot be guaranteed, which cuts out surprises further down the line.

“When there was an increase, the life company told me and I could pass it on. Clients are looking for reassurance not reinsurance.”