TAL Life has called for artificial distinctions between life and health insurance to become more flexible.

“The aims of life and health insurance are often aligned,” it says in a submission to the financial system inquiry.

“Life and health insurers and customers have an interest in the maintenance of good health and ready access to services that assist returns to health and a productive lifestyle.”

TAL believes regulation of all insurers should be aligned, with the Australian Prudential Regulation Authority assuming wider powers and insurers allowed to help customers improve health.

“These steps would encourage more competition, innovation and better access to services for consumers.”

The insurer also supports the retention of commissions on life insurance, arguing they facilitate access to advice for consumers.

In response to critics of such remuneration, TAL says a competitive, self-regulating market is offering consumers a variety of options.

“The range of commission-free insurance options, predominantly provided under a direct distribution, no-advice model, is growing,” the submission says.

“A growing number of fee-for-service advice businesses provide comprehensive advice and insurance solutions without commissions; these compete directly with commission-based advice businesses.”

TAL also notes an increased use of hybrid commission structures among advisers.

“We believe a more equitable position would be to allow advice fees to be tax-deductible. This would encourage more consumers to seek advisers offering this option and thus increase competitive pressure in the market.”