Life insurance regulation needs government backing: Poll

An overwhelming number of people who work in life insurance believe the industry needs government backing so it can properly regulate.

In a survey conducted by DST Systems, a large number of respondents (85%) want to engage with ASIC to strengthen the Life Insurance Code of Practice.

About half (47%) said the industry should start working with the regulator now to improve provisions within the code.

About 72% said the code needs greater clarity. Other areas of improvement in the next iteration must focus on sales practices and advertising, and policy design and disclosure.

The poll, which was conducted at the recent Financial Services Council Life Insurance Conference, found more than a third (36%) said the bar set by the code was too low, while the majority felt (59%) it was just right.

When asked about the Insurance in Super Voluntary Code of Practice, the industry voiced strong support. Every respondent said launching the code marked a step in the right direction - but they also acknowledged that it needs more work.

When it comes to the dynamics between life insurance and the financial advice sector, participants said adviser remuneration and standards need reforms to improve outcomes for customers.

Many (56%) believed such reforms would improve the low levels of consumer trust.

When asked about direct insurance, more than half (57%) believed it would grow at a slower rate in the future, as this segment faces a number of issues. This includes: failing to meet community expectations and reputation risk (54%); unconscionable or misleading conduct in telephone sales (31%); and breaching the boundaries of general advice (15%).

Participants also expressed support for the industry to take a bigger role in early intervention. Almost three-quarters (72%) supported the view that wellness is part of the industry's mandate.

Early intervention has the potential to improve the wellness of Australians and at the same time, reduce costs for the insurance sector, which can reduce fees, they said.

The talk of life insurers becoming more involved in early intervention has been taking place for 10 years - 39% of those polled felt that early intervention won't work. Only 12% believed that early intervention has been successful.

Read more: LIFLife insuranceDSTDST SystemsFinancial Services Council Life InsuranceSuper Voluntary Code of PracticeFSC
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