Insurers Embrace New Model Allowing 'Simple Advice'

3

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

Share this news item:

Insurance News

Clear

Asbestos Scare Leaves Hospitality Business Uninsured 04 Jul 2025: Paige Estritori The discovery of asbestos-contaminated mulch in a Sydney park led to the cancellation of a festival, resulting in significant financial losses for a hospitality business. Despite these setbacks, the company's claim for coverage under its business interruption (BI) policy was rejected. - read more

Landmark NSW Decision: Dog Walking Costs Covered in Car Crash Injury Claims 03 Jul 2025: Paige Estritori In a groundbreaking decision by the NSW Personal Injury Commission, an insurer has been directed to cover the costs of dog walking services for a car crash victim. The commission ruled that these services classify as domestic assistance under the state’s Motor Accident Injuries Act. This case could pave the way for broader interpretations of 'attendant care services' for claimants. - read more

Extreme Weather Drives $1.8 Billion in First Half Losses for Australian Insurers 03 Jul 2025: Paige Estritori Extreme weather events in Australia have resulted in significant financial impacts for insurers, tallying $1.83 billion in losses during the first half of the year. This comes as insurance companies gear up for further claims linked to ongoing severe weather in New South Wales. - read more

ClearView Names New Underwriting Head Amidst Strategic Changes 30 Jun 2025: Paige Estritori ASX-listed life insurer ClearView has announced the appointment of Peter Tilocca as Head of Underwriting, coinciding with key updates to its underwriting standards and definitions. Tilocca's extensive two-decade career in Australian underwriting includes leadership roles at Zurich, Noble Oak, One Path Life, and RGA Australia. His new role with ClearView commenced on 30 June. - read more

Ombudsman Supports Theft Claimant in Home Business Coverage Dispute 30 Jun 2025: Paige Estritori A recent case has seen a policyholder triumph over her insurer after the Australian Financial Complaints Authority (AFCA) ruled in her favour following a contentious dispute regarding home business operations. The controversy arose when the woman's theft claim was denied by her insurance provider, IAG, over allegations of fraudulent misrepresentation about the use of her rental property. - read more