The Association of Financial Advisers (AFA) has attacked Assistant Treasurer Bill Shorten for ignoring the lack of life insurance held by Australians.

AFA CEO Richard Klipin says the debate on financial reforms has focused on adviser remuneration and not the chronic levels of underinsurance.

“There is now a plethora of research supporting the fact that if commissions are banned, many ordinary Australians will not seek life insurance advice,” he said.

“Without advice, Australians are often significantly underinsured or more commonly, and more worryingly, not insured at all.”

Mr Klipin says this summer’s floods, cyclones and bushfires highlight the need for people to be insured.

“We are calling on Mr Shorten to work with us to help protect consumers against the financial impact of death or disaster and to resist tinkering with a remuneration system which is not broken.”

According to the Lifewise/NATSEM Underinsurance Report, underinsurance is expected to cost the Federal Government $1.3 billion during the next 10 years.

Mr Klipin says lobby groups with vested interests are attempting to camouflage the issue of underinsurance with an unnecessary debate about adviser remuneration.

“These groups clearly have their own agenda and are working in their own rather than the consumer’s best interest,” he said.