While some progress has been observed, with certain insurers shifting focus from sales-only targets to broader measures such as compliance and customer engagement, discrepancies remain. A number of companies continue to intertwine sales volume expectations with compliance metrics, and predominantly review successful sales calls without adequately addressing issues in non-converting interactions.
ASIC Commissioner Alan Kirkland cautioned in a letter to industry leaders that the emphasis on sales volume and targets may still lead to pressurised or misleading sales tactics, contradicting consumer interests. The review, which analysed data from insurers and distributors between July 2021 and June 2022, sought to determine if consumer outcomes had improved since the last inquiry in 2018.
Regarding product design, the report highlighted a reliance on sales data over consumer feedback during the design process, a practice that contradicts post-Hayne requirements for consumer-centred product offerings. ASIC warned that responses to the flagged issues would guide the commission's subsequent actions, including potential investigations or enforcement measures.
Drew MacRae of the Financial Rights Legal Centre expressed disappointment at some insurers' continued reliance on sales-linked remuneration, noting that such practices perpetuate high-pressure sales tactics. In contrast, Christine Cupitt of the Council of Australian Life Insurers reaffirmed the industry's commitment to aligning products with consumer needs and expressed a willingness to collaborate with ASIC to meet expected standards.
Moving forward, the life insurance industry stands at a crossroads, facing regulatory pressure to further reform its practices to better serve Australian consumers. Stakeholders await additional guidance from ASIC, which could significantly influence future strategies and enforcement actions.
