By Bianca Richardson, Senior Policy Manager at the Financial Services Council
The annual Financial Services Council Life Insurance Conference was held in Sydney yesterday. The conference presented an opportunity for the industry to come together to explore key developments and emerging issues.
It was also an opportunity to reflect on the significant progress the industry has made in the last twelve months, driving key reforms to strengthen the sector and enhance consumer outcomes. This has included remuneration reforms to reduce conflicts of interests and the publishing of the Life Insurance Code of Practice (Code) to raise service standards across life insurance.
With the commencement for all FSC life insurers just around the corner on 1 July 2017, at the top of the Conference bill was a plenary discussion on the Code itself. It was clear from the Panel discussion that the Code’s success will depend on what will be done in day-to-day practices to adhere to the principles as well as the spirit of the Code. Having a consumer focus will also be key.
A number of issues explored over the course of the day noted the challenges and opportunities presented by medical advancements and leaps in technology. For example, there have been swift enhancements in genomics – including the proliferation of affordable DNA sequencing – which have opened up consumer access to genetic testing and enhanced risk assessment for life insurers. However, progress is challenged by consumer concerns regarding genetic testing and discrimination.
From a technological and regulatory perspective, it is a tough balancing act to facilitate competition and fintechs’ disruption in the market whilst maintaining sufficient regulatory safeguards to protect consumers. New market participants may be seeking a facilitative – or light touch – regulatory environment which can seem fine at face value until something goes wrong and questions are asked why there wasn’t sufficient regulatory scrutiny.
Mental health and underwriting featured as another key topic of the day. Discussions centred around the availability of data to support underwriting decisions with Dr Doron Samuell, a psychiatrist and behaviour risk management expert, stating that there is an enormous amount of reliable data to support mental health underwriting. There was an acknowledgement amongst panellists that more work needed to be done on mental health and that this was an important issue not just for the life insurance industry but for society as a whole.
Culture, the importance of social license and focusing on the consumer were key themes which permeated across the sessions and at every level of the industry, whether in product development right through to the claims process. There was widespread acknowledgment that this is critical to the consumer experience and strengthening trust in the life insurance industry.
As a personal reflection to yesterday’s conference, it is heartening to see the positive progress the industry has made in just the last twelve months. Widespread legislative reform often takes many more years to bed down. For example, Bernie Ripoll’s 2009 Parliamentary Joint Committee report recommendations were not implemented until 1 July 2013 via the Future of Financial Advice Reforms. The recommendation to establish a new adviser standards board to set standards for financial advisers has also only just been legislated this year, some eight years after Ripoll’s recommendation.
The progress in life insurance has been both swift and widespread and is not to be underestimated as a significant feat. The dialogue and focus for the industry has now also shifted, there is an acknowledgment of the key progress made whilst also having a continued commitment to strengthening life insurance.
Brett Clark thanked everyone for their participation over the last 12 months, however noted the need for continued focus with further commitment needed to progress the next pieces of work (such as the second iteration of the Code) and closed off with a call to action to keep this positive progress going.
I’m looking forward to seeing the strides forward we will make in this regard over the next twelve months.