Regulatory Scrutiny Reveals Ongoing Failures in Direct Life Insurance Sales
Regulatory Scrutiny Reveals Ongoing Failures in Direct Life Insurance Sales
While some progress has been observed, with certain insurers shifting focus from sales-only targets to broader measures such as compliance and customer engagement, discrepancies remain. A number of companies continue to intertwine sales volume expectations with compliance metrics, and predominantly review successful sales calls without adequately addressing issues in non-converting interactions.
ASIC Commissioner Alan Kirkland cautioned in a letter to industry leaders that the emphasis on sales volume and targets may still lead to pressurised or misleading sales tactics, contradicting consumer interests. The review, which analysed data from insurers and distributors between July 2021 and June 2022, sought to determine if consumer outcomes had improved since the last inquiry in 2018.
Regarding product design, the report highlighted a reliance on sales data over consumer feedback during the design process, a practice that contradicts post-Hayne requirements for consumer-centred product offerings. ASIC warned that responses to the flagged issues would guide the commission's subsequent actions, including potential investigations or enforcement measures.
Drew MacRae of the Financial Rights Legal Centre expressed disappointment at some insurers' continued reliance on sales-linked remuneration, noting that such practices perpetuate high-pressure sales tactics. In contrast, Christine Cupitt of the Council of Australian Life Insurers reaffirmed the industry's commitment to aligning products with consumer needs and expressed a willingness to collaborate with ASIC to meet expected standards.
Moving forward, the life insurance industry stands at a crossroads, facing regulatory pressure to further reform its practices to better serve Australian consumers. Stakeholders await additional guidance from ASIC, which could significantly influence future strategies and enforcement actions.
Published:Wednesday, 20th Aug 2025
Source: Paige Estritori
Share this news item:
| AFCA Rules on Disputed Car Insurance Payout 22 Aug 2025: Paige Estritori The Australian Financial Complaints Authority (AFCA) has decided against a man's claim for a car insurance payout, which he pursued following a dispute with his ex-wife. The issue arose when the man's Toyota Landcruiser was involved in an accident in April, prompting him to file for a cash settlement of $55,950. However, the ex-wife, who held the insurance policy, later blocked his access to the payout. - read more |
| APRA Addresses Home Insurance Affordability Challenges with New Initiatives 22 Aug 2025: Paige Estritori The Australian Prudential Regulation Authority (APRA) has highlighted the ongoing challenges of home insurance affordability, emphasizing that the issue remains complex despite a recent moderation in reinsurance costs. APRA Chair John Lonsdale noted that multiple factors contribute to this difficulty, not solely reinsurance expenses. APRA is actively engaging with insurers, government agencies, and the private sector to address these affordability issues. - read more |
| ASIC Calls for Revamp in Life Insurance Sales and Service 21 Aug 2025: Paige Estritori The Australian Securities and Investments Commission (ASIC) has issued a call to action for life insurance companies, urging them to enhance their product offerings and sales processes. While acknowledging some progress since the Hayne Royal Commission, ASIC highlights ongoing issues within the industry. The regulator emphasized the importance of centering strategies around customer needs, particularly as companies aim to expand direct-to-consumer sales. - read more |
| Regulatory Scrutiny Reveals Ongoing Failures in Direct Life Insurance Sales 20 Aug 2025: Paige Estritori The Australian Securities and Investments Commission (ASIC) has released findings from a recent review, revealing persistent deficiencies in the direct sales practices of the life insurance industry. Despite heightened scrutiny following the Hayne Royal Commission, challenges remain in several key areas, including product design, sales strategies, remuneration, and customer complaint handling. - read more |
| Life Insurers Urge Government Action on Mental Health Funding 19 Aug 2025: Paige Estritori Life insurers in Australia have joined forces with mental health advocates to press the federal government to honour its $1 billion pledge for mental health initiatives. The Council of Australian Life Insurers (CALI) is among the key signatories of an open letter organized by Australians for Mental Health, urging swift action on funding allocation. - read more |
| Understanding Life Insurance: How to Determine Coverage Amounts Life insurance is a cornerstone of financial planning, offering peace of mind to you and security for your loved ones. It's a contract between you and an insurance company: in exchange for regular premiums, the insurer agrees to pay a sum of money to designated beneficiaries upon your passing. This vital tool ensures that your family's financial needs can be met during an incredibly difficult time. - read more
|
| Income protection insurance It's trite but true to say that, for most people, their most valuable asset is their ability to earn an income. But how relevant is income insurance to most Australians? - read more
|
| Life Insurance Essentials: Protecting Your Growing Aussie Family Life insurance remains one of the most crucial considerations for new parents aspiring to provide a secure future for their growing families. The arrival of a child marks a transformative moment, redefining priorities and responsibilities. At its core, life insurance is a safety net, designed to offer financial protection and stability to loved ones in the event of an unforeseen tragedy. - read more
|
| How to Protect Your Income During Health Setbacks: A Complete Guide Income protection is a crucial safety net for Australians, offering financial security when health setbacks strike. This type of insurance ensures that you continue to receive a portion of your income if illness or injury prevents you from working. It’s an essential aspect of financial planning, providing peace of mind knowing that you can maintain your lifestyle even when unforeseen health issues arise. - read more
|
| The Role of Health Insurance in Supporting Preventive Care Preventive healthcare refers to measures taken to prevent diseases, rather than treating them after they occur. This includes actions like regular health screenings, vaccinations, and adopting healthy lifestyle practices. - read more
|
The amount you must pay out-of-pocket for expenses before your insurance company covers the remaining costs.