Insurers Embrace New Model Allowing 'Simple Advice'
Insurers Embrace New Model Allowing 'Simple Advice'
3
The information on this website is general in nature and does not take into account your objectives, financial situation, or needs. Consider seeking personal advice from a licensed adviser before acting on any information.
General insurers have been given the green light to offer "simple advice" under a new model presented by Financial Services Minister Stephen Jones.
The Albanese Government's response to the Quality of Advice Review (QAR) final report includes this move, which has received strong backing from the insurance industry.
The Insurance Council of Australia (ICA) believes that this change will lead to clearer conversations between customers and insurers, resulting in improved financial outcomes for consumers.
The proposed model introduces a new category of "qualified" financial advisers who will be employed by general insurers. These advisers will provide consumers with guidance on less complex financial matters. The simple advice model will also extend to life insurers, banks, and superannuation funds.
Under this new framework, insurers and other financial institutions will take complete responsibility for the advice provided. Commissions and fees will be banned.
Treasury has stated that these new financial advisers will be trained and employed by financial institutions in response to a QAR recommendation. However, the Government is taking additional precautions not included in the QAR report. Qualified advisers will be subject to a "modernized" best interests duty rule, meet prescribed competency standards, and comply with other obligations.
However, two key proposals from the QAR report - expanding the definition of personal advice and introducing a good advice duty obligation - have been dismissed.
Financial Services Minister Stephen Jones asserts that these measures will expand the availability of advice under a new model that prioritizes high-quality, helpful, and safe advice for consumers.
He further explains, "Qualified advisers will focus on providing simple financial advice, and they will be prohibited from charging fees or receiving commissions. This will help ensure that their advice remains within the realm of simplicity."
Michelle Levy, the QAR Reviewer, expresses her satisfaction with the Government's decision to amend the law, allowing more individuals to access financial advice when needed. Additionally, she originally proposed an expanded definition of personal advice to provide clarity for advice providers and improve the quality of advice received by individuals.
"While institutions have access to more personal information about their customers and members, it is highly likely that much of the advice they provide is already considered personal, even without the recommended change to the definition," says Levy.
The ICA views the proposed revised regulations, which create a new class of "qualified advisers" and allow for less complex financial advice without full professional qualifications, as a significant improvement in access to information about simple insurance matters that are currently restricted.
These changes are particularly important considering the growing protection gap. Customers will now be better informed when choosing insurance that adequately covers the risks they face.
"Insurers understand their customers' frustration regarding the current one-size-fits-all approach," says ICA CEO Andrew Hall. "While the regulations implemented following the Hayne royal commission aimed to eliminate bad financial advice, they unintentionally limited access to insurance advice for most average consumers."
Industry experts are eagerly awaiting further details about the planned "modernized best interests duty" regime. The Treasury document provides minimal information about the specifics, but it is crucial to monitor closely as the revised duty will apply to all advice providers, according to the Government.
Published:Friday, 8th Dec 2023 Source: Paige Estritori
Please Note: If this information affects you, seek advice from a licensed professional.
The National Truck Accident Research Centre (NTARC) has released its 2025 Major Incident Investigation Report, shedding light on the primary human factors contributing to significant truck crashes across Australia. The findings emphasise the critical roles of inattention, distraction, and inappropriate speed in these incidents, underscoring the necessity for targeted safety interventions within the transport industry. - read more
QBE Australia Pacific has recently entered into a strategic partnership with Sure Insurance, aiming to bolster its broker-distributed householders cover. This collaboration signifies a concerted effort to provide more comprehensive and accessible home insurance solutions tailored to the diverse needs of Australian homeowners. - read more
Underwriting agency Blue Zebra has recently announced the establishment of new capacity arrangements for its home building and contents, landlord, and small to medium-sized enterprise (SME) package products. This strategic move is set to enhance the agency's ability to offer comprehensive and competitive insurance solutions tailored to the evolving needs of Australian homeowners and business operators. - read more
The Insurance Code Governance Committee has imposed a $30,000 penalty on AIG Australia for breaching its obligations related to claims handling. The insurer failed to inform customers about delays in processing their claims and neglected to advise them of their right to escalate complaints to the ombudsman. This regulatory action underscores the critical importance of transparency and communication in the insurance claims process. - read more
Insurance Australia Group (IAG), a leading insurer in Australia, has highlighted the significant impact of climate change on the cost of home insurance. The company reports that the increasing frequency and severity of weather events are contributing to rising premiums for homeowners. - read more
Life insurance and estate planning are critical components of financial security. They ensure that your loved ones are protected financially when you are no longer around. By understanding these tools, you can take significant steps to secure your family's future. - read more
The financial fabric of our lives consists of both planning and safeguarding against the unforeseen. Trauma cover, a lesser-known but crucial aspect of personal insurance, provides this protection by offering a lump sum payment upon diagnosis of specific serious illnesses or injuries. In the tapestry of financial planning, it acts as a vital safety net, ensuring that unexpected health crises do not lead to monetary distress. - read more
When it comes to life insurance, a pre-existing condition refers to any medical condition or illness that you have been diagnosed with before applying for a life insurance policy. - read more
Life insurance, a contract between an insurer and a policyholder, is designed to provide financial protection to loved ones in the event of the policyholder's death. For parents, this protection takes on a new level of significance. The birth of a child heralds a profound shift in priorities, with a focus on safeguarding the future of one's family. Hence, understanding life insurance options becomes a crucial aspect of responsible parenting. - read more
The digital age has fundamentally transformed how we approach almost every aspect of our lives, including the way we shop for life insurance in Australia. Gone are the days when one had to schedule meetings with insurance agents or flip through pamphlets to understand life insurance policies. Today, obtaining life insurance quotes online has become the norm, offering a hassle-free and incredibly accessible platform for individuals to safeguard their financial future. - read more
Start Here !
Apply now for your free Insurance assessment and price comparisons!
Knowledgebase
Claim: A formal request made by the policyholder to the insurance company for payment of a loss covered by the insurance policy.
