Advisers and life insurance companies are not expecting the Government’s proposed opt-in proposal to cause too many problems.

Australian Financial Risk Management CEO Phillip Young told insuranceNEWS.com.au his practice has processes that review a client’s insurance annually.

“We have a process in our management system to review annually, but we can also undertake six-monthly reviews,” he said.

“It is our policy to advise the client before they receive their annual statement from the insurer.”

Mr Young says the company also sends out a questionnaire asking about income levels, hospital visits and other relevant facts that might affect the policy.

“We do not operate a sell and forget culture here, but opt-in will affect advisers who don’t look after their clients,” he said.

Lanyon Partners CEO Bruce Birchall told insuranceNEWS.com.au he wasn’t anticipating a problem with opt-in for his practice’s life insurance clients.      

“We would offer a review on a yearly basis and opt-in could be included as part of that,” he said. “We will have to see what the legislation specifies but it will mean we will see clients more often.”

Hood Sweeney MD Matthew Rowe says his firm undertakes regular reviews of clients’ insurance policies and does not see the opt-in proposal as a problem.

“We do the reviews through X-plan, which is set up to trigger a review on the policy’s anniversary,” he told insuranceNEWS.com.au.

Asteron EM National Sales Mark Vilo told insuranceNEWS.com.au opt-in could reduce the efficacy of some practices.

“The devil will be in the detail when we see the legislation, but we have already been thinking about how this will be incorporated in out business model,” he said.

“It will take time to incorporate the proposal into our systems, but we think advisers will just include opt-in as part of their annual conversation with the client.”

Clearview Head of Life Insurance Clive Levinthal believes opt-in will cause some problems for the clients.

“A number of people have life insurance through a corporate superannuation fund on a platform,” he told insuranceNEWS.com.au.

“The adviser is paid a commission for that service, but under FOFA he won’t be paid so he won’t be ensuring clients sign opt-in forms and they will lose their cover.”

Mr Levinthal says opt-in will also cause some problems with claims management.

“If the adviser hasn’t received an opt-in authorisation from the client and there is a claim, they will no longer be acting for that client. It will be the loss of a valuable service to the client, as the advisers have a relationship with the underwriter and can help solve problems that arise.”

Mr Levinthal says insurers will sometimes pay claims ex gratia when there is some question about the policy.

“The advisers play an important role in pushing for these payments, but if the client hasn’t signed the opt-in form, then the adviser won’t represent them.”

Haywood Financial Management MD Scott Haywood says the annual reviews will meet the opt-in requirement, but he admits getting the client to sign a bit of paper will be another issue.

“I don’t think opt-in is a problem, but I don’t think clients will want to sign a form every time they receive the annual review,” he told insuranceNEWS.com.au.

“I wouldn’t sign a form to keep my car insurance going, I will pay the premium, but that is it.”