The ‘cost of financial advice’ has been a hot topic of late with the Government’s Quality of Advice review proposal paper released in August. The review was born out of recommendations in the Financial Services Royal Commission to examine how the regulatory framework could better support the provision of high-quality, accessible and affordable advice. The proposed reforms seek to maintain consumer protections whilst allowing financial advice to be delivered to clients in a clear and personalised way. You can read more about the proposed reforms in our recent update.

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Medical and financial underwriting will continue to be challenging in the Life Insurance space with requirements relating to COVID-19 still in place. High levels of cover are being scrutinised more than ever, particularly for individuals in “high risk” industries such as construction. We expect these requirements to ease somewhat, however, the requirement to be fully recovered from COVID-19 for a minimum of 30 days will remain. Insurers are beginning to see more claims relating to clients with long COVID-19 symptoms, however, these are fewer and smaller than expected.

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Returning to the topic of the Government’s Quality of Advice review, the number of financial advisers leaving the Life Insurance industry has been declining for some time, following dramatic changes to professional standards which have become increasingly complex and expensive for consumers and advice providers to navigate. In turn, this is contributing to Australia’s worsening underinsurance gap.

Treasury is awaiting a final report due in December 2022 on the Quality of Advice review. The interim proposals suggest the shift from prescriptive processes and inputs to a principles-based regime released in August has been received well by the sector and there is hope this will enable more financial advisers to remain in the industry.  The proposed reforms seek to maintain consumer protections whilst allowing financial advice to be delivered to clients in a clear and personalised way. We will provide timely updates as the review progresses.