The Australian Securities and Investments Commission (ASIC) is urging life insurance companies to enhance their practices in product design, sales, and handling complaints. This call to action comes as these companies move towards expanding direct sales to customers.
In a letter from ASIC Commissioner Alan Kirkland, four key recommendations were highlighted. These include strengthening product design, improving sales practices, and treating complaints as essential business intelligence to enhance customer experiences.
“While life insurance can provide valuable benefits to consumers, it is typically a complex and costly product, so it is important that sales practices are designed with customers’ needs in mind,” said Commissioner Kirkland. He emphasised the necessity for life companies to centre their offerings around customer needs, incorporating feedback and data from complaints and claims.
Kirkland noted that despite some improvements, notable deficiencies remain. Dispute rates have more than doubled since ASIC’s last review in 2018.
ASIC’s recommendations include:
1. Strengthening product design by using customer feedback and improving monitoring.
2. Enhancing sales practices by linking staff pay to customer satisfaction and compliance.
3. Implementing consistent quality standards for retention calls while ensuring clear practices to avoid pressure tactics.
4. Using complaints as valuable intelligence by sharing information across business units for systematic improvements.
The commissioner stressed that these improvements are particularly crucial for companies looking to expand their direct sales. ASIC plans to investigate companies that fail to show progress in addressing the issues outlined in the letter.
ASIC’s previous review examined direct sale practices and revealed significant concerns in the industry. Following recommendations from the Royal Commission into Misconduct in the Banking, superannuation and Financial Services Industry, ASIC assessed documentation from various life insurers to check for consumer outcome improvements since the 2018 review.
