493 advisers write half of all life policies

New numbers from Adviser Ratings show that half of all life policies were written by just 493 advisers in the six months to 30 June 2023. The other 50 per cent were written by 5,880 advisers, taking the total pool of advisers that wrote life policies to 6,373.

“The retail life industry is currently surviving on a small cohort of advisers to bring in new business,” Adviser Ratings said.

“With 15,634 advisers in Australia at the end of June, in the last six months, only 40 per cent wrote a life insurance policy, what was once a standard part of an adviser’s armoury when onboarding a client or reviewing as a staple of their annual meeting.

“As advisers have shifted to servicing more retirees and ‘riskies’ have fled in droves, underinsurance is worse than ever.”

The firm added that 127 advisers were responsible for 25 per cent of all policies and earned an average of $200,000 to $250,000 in upfront commissions every year, noting that this represents a “a significant drop from the earning potential prior to LIF”.

“Which begs the question, if the top line is immovable, will broader technology solutions, the QAR or adviser recruitment help bridge the gap?” Adviser Ratings asked.

In order to bridge this gap and address under-served segments of the market, Adviser Ratings said, “all stakeholders need to come together to find a viable solution”.

“Technology and customer centricity will play a role, but government incentives such as rebates or tax deductibility on death insurance should also be on the table,” it said.

“And will super funds and group life play a larger role? The recognition of the issue is even more apparent following the demise of Integrity Life. The insurers are awake to the issue, and have thrown their support behind CALI, the Council of Australian Life Insurers, to help enliven the sector and provide a united voice for stakeholders and to government.”

Industry veteran Marc Fabris, who recently launched risk adviser support platform Risk Hub, said the numbers highlight the impact of the various changes and pressures the industry has witnessed over the last few years, adding that the risk industry has “certainly been suffering”.

“I do think there is a real opportunity for growth though. The research highlights the number of advisers with a very small focus on risk advice,” Mr Fabris said.

“For these advisers – unsurprisingly it would hardly seem worth the effort. When it isn’t a regular process within the business it’s unlikely to be streamlined – and therefore is resource heavy. Tripling the new business for risk therefore wouldn’t treble the effort for the practice.

“So, there is absolutely an opportunity for the ‘occasional’ risk writers to make it a more viable proposition – making it more beneficial for their business and more beneficial for their clients.”

He added that help is required if risk advice has any chance to return to the forefront.

“Assuming there is to be no reversion to previous commission rates, we need to bring more efficiency into the value chain, to make providing risk advice more viable,” Mr Fabris said.

“Some of this is in the hands of advisers – internal processes need to become more seamless. Some is in the hands of insurers – to help make the pre-assessment, onboarding, and review processes more efficient.

“Then there are also vendors who help deliver services, such as technology or related services which help reduce manual effort and turnaround times.”