MetLife report on risk commissions

MetLife released a report on the role of Australia’s life insurance industry, including a statement of support on risk commission retention. The  Value of Life Insurance Report considers the role of the life insurance industry in Australia across three main categories:

• Individuals

• The economy

• Society

MetLife said in a statement that the report is information for policy-makers, regulators, industry participants and other stakeholders regarding the positive impact and contribution of the life insurance sector. The report considers issues with sustainability of the industry, with supply issues of high-quality products with the off-the-shelf models that reduce costs and provide lower-quality products.

The report tackles the commissions dilemma with regulatory downward pressure on insurers and advisers. Just 27 per cent of Australians receive financial advice, with commissions providing a way to pay over time for advice, rather than a lump-sum payment that many can’t or don’t want to afford.

The report dispels some common myths while calling for unity in the industry. The report favours commissions, saying their removal would be an uncommon move, led only by the UK’s 2013 ban on commissions that was then partially retracted to allow life insurance commissions.

The report looks in greater detail at the monetary value consumers gain from insurance if illness or injury strikes, particularly when compared to government benefits. The move to remove commissions would likely restrict access to advice even further.