‘QAR will make life insurance more accessible and affordable’

A KPMG webinar heard that the life industry has encountered some serious issues this year, including affordability and cost challenges.

Speaking on the webinar, which coincided with KPMG’s release of its life insurance insights for 2022, the CEO of NobleOak Life Insurance, Anthony Brown, touched on the challenges, which he explained have muted growth.

“There is a fundamental need for life insurance,” Mr Brown said.

“We just have to be able to get it to people in an affordable and accessible way,” he noted, stressing the “ridiculous” cost of advice.

Touching on the rapid decline in adviser numbers — 10 to 15 per cent per year — a rate which according to KPMG’s research matches the downward curve witnessed across the sale of insurance products, Mr Brown said he is “quite optimistic” about the Quality of Advice Review (QAR) and how it could impact the industry.

“If SOA’s [Statements of Advice] are no longer required and other compliance burdens are reduced, and new advice models emerge, just basically around digital, scaled advice models that have been talked about for over 15 years, but I don’t think there has ever been a real mandate to get them and there probably hasn’t been that support from the regulators, which there is now, that will help create the demand,” Mr Brown said.

“I do think there is reason to be optimistic around the industry. There is still quite a bit of work to do. And I do think it will take a while before advice models are redesigned in a way that will attract new advisers into the industry, as well as keeping some of the existing advisers engaged,” he added.

Ultimately, Mr Brown said the aim of the QAR is to “make life insurance more accessible and affordable, but also the quality of it to be better”.

“And if we can get halfway where we’d like to get to, that would be a wonderful step forward.

“Some of the things coming out, getting clarity around the remuneration framework for advisers is really important. They’ve got to be remunerated for providing good advice, but that remuneration conflict has to be really well managed,” Mr Brown said.

Also present on the webinar, TAL Group CEO Brett Clark said one of the central issues for the industry is that fewer customers are insured.

“Those that are, are paying more — and this goes to this point directly around the affordability of premiums. Ultimately, that picture of fewer customers being insured and those that are insured paying more are not the ingredients for a healthy and sustainable industry,” Mr Clark said.

According to KPMG data, while the industry made $500 million in profits in the fiscal year ending June 2022, $600 million of those profits were generated in the insurers’ statutory funds. This was underpinned by increased profitability of $1.2 billion on risk products and decreased profitability of $1.2 billion on non-risk products due to adverse investment markets.