Churn in Australian watchdog's sights

ASIC's senior executive leader of its financial advisers team, Joanna Bird, said the regulator had seen widespread instances of churn across the sector.

It first raised it as an issue of potential concern last year. That's despite Australian advisers generally earning less upfront commission than their Kiwi colleagues, and more trail.

“We intend to do a project on life insurance churn and it will have three parts,” Bird told a Money Management Risk Issues panel discussion. “First part will be speaking to insurers and trying to get data on the extent of the problem and how we can work with insurers to try and deal with the problem. Another part of the project would be a more traditional approach - reviewing advice given and looking at the policies that were switched. We’re also doing work in relation to marketing and promotion of direct insurance. This is a complex problem and we’ll try and attack it from all angles."

But the Association of Financial Advisers said insurers would have to co-operate by sharing data on policy lapses.