The issue of churning within Australia’s life insurance sector is an industry-wide concern and should be addressed collectively by sector participants, an insurance executive has said.
MLC Insurance executive general manager Duncan West said while churning, in his view, was not rife within the industry, it was an issue that needed to be tackled.
West said the industry needed to examine how to incentivise people who did not churn and how to deal with people who did churn.
He said one of the options put forward by the federal government was adopting level commission and commission clawback for longer periods of time, however, he believed the issue should also be looked at by all insurance industry stakeholders.
“I personally would like to see a collective industry solution as opposed to just a product provider solution. It’s not in the clients’ interest,” he said.
“The best people to sort it out are actually the people in the industry because they know, and any regulation you put in place runs the risk of having unintended consequences.”
He said it was his view that a solution could be found.
“If we take a holistic view and then we all focus on growing the 20 per cent of people who are advised, how can we get it to 25 to 30 to 35 per cent and spend our time on that and how can we grow the market rather than try and steal each other’s business,” he said.
West made the comments at the launch of MLC’s new insurance product, MLC Insurance.
The new offering, which leverages off existing Aviva insurance products, is a key part of the wealth management firm’s push to increase its presence in the insurance and independent financial adviser (IFA) sector.
“We’re launching it now because we’re ready to launch it . we see this as an opportunity for this total insurance solution,” West said.
“The IFA market is a key target for us as part of this and we expect there to be positive response to it. We know that from the Aviva heritage it was strong in the IFA market. Some of this is very similar, but taken to another level.”
The new offering, which was announced in August, will include enhancements to Riskfirst as well as a new desktop-based quotation tool, Illustrator.
MLC expects the new offering will reduce turnaround times on new insurance business by up to 70 per cent.
