Financial planners are better placed to address underinsurance than direct life insurers, according to the Financial Planning Association (FPA).

Responding to an actuarial report predicting growth in the direct market, FPA CEO Jo-Anne Bloch says the Government should free up planners to address the “real problem” of underinsurance.

“We welcome any steps to make the purchase of life insurance easier and more cost-effective,” Ms Bloch told insuranceNEWS.com.au.

The FPA is urging the Government to help planners address underinsurance by reducing the paperwork for small premiums under $1500 and aligning tax rates on insurances other than superannuation.

Ms Bloch also warns of the potential risks for clients who bypass planners. “It should be noted that clients of financial planners have more adequate risk protection than those who aren’t advised, according to an IFSA survey released last year,” Ms Bloch said.

The Rice Warner report says Australian life providers remain wedded to traditional distribution channels via group business and the retail market through licensed financial planners.

But the report claims companies are re-examining their distribution strategies as a result of market trends such as increasing product complexity, technology, price competition, advice regulations and endemic underinsurance.