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 latest Major Incident Investigation Report, shedding light on the predominant causes of significant truck crashes across Australia. The findings reveal that human factors, particularly inattention, distraction, and inappropriate speed, continue to be the leading contributors to these incidents. - read more
In a strategic move to enhance the value of its offerings, TAL has announced the expansion of its Health Sense Plus program to encompass income protection insurance. This initiative, effective from 8 August 2025, aims to incentivise proactive health management among policyholders by providing premium discounts. - read more
Australia's insurance sector is experiencing a significant shift as mental health conditions become the predominant cause of total and permanent disability (TPD) claims. Recent data from the Council of Australian Life Insurers (CALI) indicates that mental health issues now account for nearly one-third of all TPD claims, marking a substantial change in the industry's claim patterns. - read more
The Australian Prudential Regulation Authority (APRA) has raised concerns about the sustainability of income protection insurance, following industry losses amounting to $2.5 billion over five years. APRA has urged life insurers to implement reforms to enhance the viability of these products and ensure they continue to meet policyholders' needs. - read more
In a significant development for Australia's marine insurance sector, Rhodian Group has announced the launch of Marinex Underwriting, a new agency dedicated to providing specialised marine insurance products tailored to the Australian market. This initiative marks Rhodian's third agency launch, following the establishment of Halo Underwriting and Batch Underwriting in previous years. - read more
The horizon of the insurance industry has undergone a transformative shift with the advent of digital technology. With a few clicks, consumers can navigate the once-complex world of insurance policies from the comfort of their home. The digital landscape for insurance services offers unprecedented access to information, comparisons, and instant communication, fostering a more empowered insurance client. - 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
For many millennials, navigating the complexities of personal finance and future planning can feel like a bewildering journey. Among these financial responsibilities, life insurance emerges as a paramount consideration. More than just a safety net, life insurance can be the cornerstone of a sound financial strategy, providing peace of mind for both the policyholder and their loved ones. - 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
Being prepared when it comes to life insurance claims can make a world of difference. Proper preparation helps you prevent delays and denials, ensuring that your loved ones receive the financial support promised by your policy without unnecessary hold-ups. By paying attention to the details, you can streamline the claims process, giving you and your family peace of mind during what is already a stressful time. - read more
Start Here !
Apply now for your free Insurance assessment and price comparisons!
Knowledgebase
Policyholder: The individual or entity who owns the insurance policy.
