Ongoing Deficiencies in Direct Life Insurance Sales Practices Identified by ASIC

Key areas of concern include:

• Product Design: Some insurers rely heavily on sales data during the design phase, with limited use of customer feedback, potentially leading to products that do not fully meet consumer needs.
• Sales and Pay Practices: While some insurers have moved away from sales-only targets, others continue to emphasize sales volumes, which can incentivize high-pressure or misleading sales tactics.
• Retention and Cancellation Terms: Weaknesses in these areas may result in consumers being locked into unsuitable policies or facing challenges when attempting to cancel coverage.
• Handling of Complaints: Deficiencies in complaint management processes can lead to unresolved consumer grievances and diminished trust in insurers.

ASIC Commissioner Alan Kirkland emphasized the need for insurers to prioritize consumer interests, stating that the prominence of sales volume targets can lead to practices contrary to consumer welfare.

For consumers, this review highlights the importance of:

• Thoroughly researching and understanding life insurance products before purchase.
• Being cautious of high-pressure sales tactics and seeking independent advice when necessary.
• Reviewing policy terms, especially regarding cancellation and complaint procedures, to ensure they align with their expectations and rights.

As the industry works to address these issues, consumers are encouraged to remain vigilant and informed to make decisions that best suit their financial protection needs.