ASIC Calls for Revamp in Life Insurance Sales and Service

The Australian Securities and Investments Commission (ASIC) has issued a call to action for life insurance companies, urging them to enhance their product offerings and sales processes.

While acknowledging some progress since the Hayne Royal Commission, ASIC highlights ongoing issues within the industry.

The regulator emphasized the importance of centering strategies around customer needs, particularly as companies aim to expand direct-to-consumer sales.

ASIC Commissioner Alan Kirkland stressed that despite the potential benefits of life insurance, the complexity and cost of the products necessitate customer-centric sales practices. He advocated using customer feedback and complaints data to address consumer concerns effectively.

The directive follows ASIC's comprehensive review of the life insurance industry's direct sales operations, examining documents and practices over a three-year period. This review aims to assess whether consumer outcomes have improved since 2018. The analysis coincides with the forthcoming Delivering Better Financial Outcomes legislation, which will permit life insurers to employ a new class of advisers qualified to advise on APRA-regulated products.

Kirkland, who previously led consumer advocacy group Choice, has a history of criticising commission-based models and flagged the Quality of Advice Review’s final report as potentially leading to future regulatory scrutiny.

ASIC's recommendations emphasise the importance of enhancing product design by incorporating comprehensive consumer feedback, including data on complaints, claims, and cancellations. The regulator also advocates for sales staff compensation to be correlated with compliance and customer satisfaction metrics. To enhance processes further, streamlined cancellation systems and proactive handling of complaints as valuable business intelligence are suggested.

ASIC has indicated it may launch investigations or take necessary actions if insurers fail to show tangible improvements. Kirkland emphasised the urgency of adopting better practices, noting that despite some advances, deficiencies persist, as evidenced by the increasing dispute rates since 2018.

As life insurance companies gear up to expand their direct sales efforts, they face a critical juncture. Strengthening product and service propositions to genuinely address customer needs will be essential, not only for compliance but also to regain consumer trust.

Published:Thursday, 21st Aug 2025
Source: Paige Estritori

Share this news item:

Insurance News

AFCA Upholds Insurer's Premium Increase Amid Consumer Complaint

01 Sep 2025: Paige Estritori

A recent decision by the Australian Financial Complaints Authority (AFCA) has ruled against a homeowner seeking an $18,000 refund from Allianz. The homeowner claimed that the insurer failed to adequately inform her about substantial increases in her optional flood cover premiums. Initially, her monthly payments surged from $369 to $1277 in August 2022, a change she only noticed in March of the following year through her bank statements. - read more

Rising Group Premiums Pose Challenges for Australian Life Insurance

28 Aug 2025: Paige Estritori

Insurance premiums for group life policies with long-term benefits have surged between 15% to 25% on average in the first half of the year, according to a mid-year market update from Marsh Australia. While the steepest increases affected those with adverse claims experiences, short-term rates and premiums for permanent disabilities remained relatively steady. The sector has also become more selective, with insurers adopting stricter underwriting standards, particularly eschewing high-risk industries. - read more

Concerns Arise Over Construction Code Pause Amid Housing Push

28 Aug 2025: Paige Estritori

The federal government's initiative to accelerate housing development by relaxing certain building regulations has raised alarm within the insurance sector. Housing Minister Clare O’Neil announced changes on social media, indicating a strategic pause on parts of the National Construction Code to expedite building approvals and encourage the construction of much-needed homes across Australia. This move comes in response to challenges in the approval process, which often delays construction. - read more

RACQ Insurance Ordered to Increase Payout After Claim Handling Flaws

27 Aug 2025: Paige Estritori

RACQ Insurance has been instructed to bolster a payout to a customer following a ruling by the Australian Financial Complaints Authority (AFCA). The dispute arose after the insurer's handling of a house fire claim lodged by a woman in October 2023 was found lacking. The fire, initiated by scented candles, resulted in significant fire and smoke damage to her home. - read more

ASIC Review Puts Life Insurance Sector Under Scrutiny

26 Aug 2025: Paige Estritori

The Australian Securities and Investments Commission (ASIC) has spotlighted significant shortcomings in the direct sale of life insurance products, urging the industry to reassess its sales practices. The recent review unearthed ongoing issues with remuneration structures, indicating that some insurers still link commissions to sales targets, potentially fostering aggressive sales tactics. The study further revealed a troubling rise in claims disputes, with reported cases more than doubling since 2018, raising concerns about the transparency and trustworthiness of these policies. - read more

Cyber Insurance Articles

Data Breach Recovery: A Comprehensive Guide for Australian Businesses

Data breaches have become a significant concern for businesses in today's digital landscape. Simply put, a data breach occurs when sensitive, protected, or confidential information is accessed, disclosed, or used without authorization. The implications of such breaches can be far-reaching, affecting not just financial health but also the reputation of businesses and the security of individuals involved. - read more

Cyber Security Essentials: Steps to Secure Your Online Business in Australia

As the digital economy flourishes, Australian businesses are enjoying the fruits of their own cyber-infrastructure but are also becoming increasingly susceptible to cyber threats. The era of the internet has ushered in a wave of new opportunities, yet it also demands vigilance in the face of growing cyber risks. With cyberattacks becoming more sophisticated and frequent, the imperative for robust cyber security measures has never been more pronounced. - read more

Navigating the Aftermath: Your Cyber Attack Recovery Roadmap

In an age where digital presence intertwines with daily operations, the threat landscape in Australia has magnified, exposing businesses to an evolving array of cyber threats. From sophisticated phishing attempts to ransomware attacks, the risk of digital insecurity looms large. Australia, with its growing technological adoption, finds itself facing an upsurge in cyber threat incidents year over year. - read more

Cyber Insurance Claims: What Small Business Owners Need to Know

Cybersecurity incidents are a growing concern for small businesses. These incidents can have disastrous consequences on the affected businesses and their customers. Cyber insurance policies provide a form of financial protection for small businesses in the event of a cyber-attack. This article will provide an overview of cyber insurance claims and its importance for small business owners. - read more

Protect Your Data: Cyber Security Measures Every Aussie Company Must Implement

In today’s digital landscape, Australian companies face an increasing threat from cyber criminals. The paramount importance of cybersecurity has never been more evident, with the surge of incidents exposing the vulnerabilities in organizations' digital defenses. As we usher into an era where data breaches and cyber attacks are commonplace, protecting digital assets becomes a crucial part of doing business. - read more

Knowledgebase

Proximate Cause:
The primary cause of loss in an insurance claim, which sets in motion a chain of events leading to the damage or injury.