The Life Insurance Framework is expected to be put to the House of Representatives by Assistant Treasurer Kelly O'Dwyer this week.
The government released exposure draft legislation in December 2015, based on the framework, which O'Dwyer said at the time would "ensure that the interests of financial firms and consumers are better aligned." Stakeholders were invited to submit commentary on the proposed legislation, with the deadline for submissions on January 4, 2016.
Under the proposed framework, ASIC will have purview over specific remuneration arrangements for life insurance products and any benefits paid will have a two-year "clawback" by life insurers. The legislation would come into effect on July 1 with a two-year transition period.
Association of Financial Advisers chief executive Brad Fox, who participated in the development of the LIF along with the Financial Planning Association of Australia and Financial Services Council, has maintained that any clawback provisions beyond a year are "punitive". Other industry stakeholders have asked for more detail about outcomes of certain points in the framework, such as the specific definition of a policy lapse.
In response, a group of advisers and practice owners formed the Life Insurance Customer Group, whose central platform was that the new framework will reduce competition and promote vertical integration in retail life insurance.
At the same time, insurers such as AIA Australia and Asteron Life have been working closely with licensees to develop new insurance product models that better-align with the new framework, along with support services to help advisers transition over.
Most recently, Synchron and AIA Australia debuted a prototype fixed-term level life insurance product, which AIA Australia retail product manager Stephen Baxter said provided "greater certainty to clients, consumer affordibility, a range of options after the fixed-term and guaranteed renewability."
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Read more about...
, Assistant Treasurer Kelly O'Dwyer
, House of Representatives
, Life Insurance Framework
, Asteron Life
, Brad Fox
, Financial Advisers
, Financial Planning Association of Australia
, Financial Services Council
, Life Insurance Customer Group
, Stephen Baxter