The Australian Securities and Investments Commission (ASIC) is urging life insurance companies to enhance their product offerings and sales practices. This call comes as companies seek to expand direct sales to customers.
ASIC Commissioner Alan Kirkland outlined key recommendations in a recent letter to the industry. The recommendations aim to improve compliance and better serve consumers.
Kirkland stressed the importance of product design that prioritises customer needs. He noted that life insurance is often complex and expensive. He emphasised that companies must use customer feedback to refine their products and services.
Despite some progress in recent years, Kirkland highlighted ongoing deficiencies. Dispute rates have more than doubled since ASIC’s last review in 2018.
Among the recommendations, ASIC is asking life insurance companies to:
– Strengthen product design by incorporating customer complaints and cancellation data into development.
– Improve sales practices by linking staff pay to compliance and customer satisfaction.
– Apply consistent standards for retention calls, ensuring respectful objection-handling.
– Treat complaints as valuable data, sharing insights across business units for improvements.
These measures are particularly crucial as life insurance companies consider expanding direct sales. ASIC plans to investigate any concerning conduct, especially if companies fail to demonstrate improvements in line with the recommendations.
The push for change follows a 2018 review and subsequent recommendations from the Royal Commission into Misconduct in the Banking, superannuation and Financial Services Industry. ASIC’s ongoing review of life insurers from July 2021 to June 2024 aims to assess customer outcomes since the last review.
