The life insurance market grew 2.4% to $16.2 billion in the year to September, latest statistics from Strategic Insight show.
The group insurance segment however, recorded minimal growth, up 1.8% year-on-year to $6.3 billion, with MetLife (14.1%), TAL (10.6%) and AIA (7.1%) reporting stronger inflows as a result of winning significant superannuation fund insurance mandates during the year.
Among the group insurers, AIA Australia held the largest market share (27%), followed by TAL (24.7%) and MetLife (8.8%), CommInsure (12.6%) and MLC (9.4%).
Meanwhile, inflows into the lump sum sub-market grew by 2.9% year-on-year with mixed company-level results. Among the market leaders, BT / Westpac (7.5%) and TAL (7.2%) experienced the highest inflows; Zurich's inflows jumped by 63.7% largely due to the acquisition of Macquarie Life.
Individual risk income inflows increased 2.6% on the prior corresponding period; among the better performers in this segment were TAL and AIA Australia, which experienced 13.2% and 10.1% year-on-year growth respectively.
The Life Insurance Framework (LIF), which rolled out on 1 January 2018 will be the strongest test of fee-for-service risk advice, a model seen as imperative to the financial advice industry's future, according to industry experts.
From January financial advisers will no longer be able to receive 120% upfront commission on the implementation of a life insurance policy. Over the next three years upfront commissions will halve to 60% and ongoing commissions will be capped at 20%. Then there is the new two-year clawback provision for upfront commissions, where in the event of a policy lapse, 100% is clawed back in the first year and 60% in the second year.
Advisers must therefore look to other income sources than traditional commission models, and are being encouraged to adopt hybrid fee models which potentially include an option of fee-for-service risk advice.
Elixir Consulting business coach and advice pricing specialist Sue Viskovic says too often she sees advisers "take for granted the value of the work they do" and this becomes problematic when trying to articulate new fee models to clients.
To be successful post-LIF, Viskovic says advisers should have revised their client on-boarding process and the pre-underwriting process so that fees for risk advice are well articulated. She suggests making the separation clear between the value of advice and the value of an insurance premium.