Talking on the FSC’s digital Life Insurance coverage Summit on Monday, MLC Life Insurance coverage chief life insurance coverage officer Sean McCormack stated the danger recommendation sector was dealing with a serious “talent challenge”, with the exodus of retiring advisers having important “downstream implications” on new enterprise for all times insurers.
“The consequences are quite crucial – in 2019, 5,000 advisers exited the industry and just 38 joined, and in the first quarter of this year 950 advisers existed with just 12 joining,” Mr McCormack stated.
“We all know we’ve obtained challenges attracting expertise to the life insurance coverage trade, and I believe the recommendation trade is seeing a few of these expertise challenges coming by as properly.
“And what we’ve seen over the last five years is new business premiums have reduced by 60 per cent, which is a significant impact on insurers that are managing the delicate balance of our insurance pools, and it’s a substantial change from an expense perspective.”
Mr McCormack stated advisers have been below important pressure on account of reducing margins within the trade, in addition to the challenges of an onerous new schooling regime.
“I’m deeply involved with the toll that is taking over the recommendation neighborhood – many advisers really feel their sense of id is being stripped away by the challenges of the previous couple of years,” he stated.
He added that insurers must be taking motion to make the recommendation course of as painless as attainable for individuals who remained within the trade, and may oppose any additional cuts to commissions within the lead-up to ASIC’s 2021 assessment of the LIF.
“Firstly, how can we work on reducing the costs of advice and fulfillment and make that process as efficient as possible on our end? We did some research with Plan for Life that indicated that the cost of advice needs to reduce by 20 to 25 per cent for risk advisers to make it profitable,” Mr McCormack stated.
“The LIF assessment can also be alternative to speak concerning the penalties of remuneration, as a result of i’m involved if we get rid of the fee model we’ve obtained in place that can additional exacerbate a looming availability concern.
“For us as an industry and regulators, it’s important we ensure good risk advice doesn’t become the domain of the wealthy, it’s there for the many and we don’t want it to become the domain of the few.”