Australian Securities & Investments Commission calls on life insurers to lift direct sales practices and warns of investigations where concerns persist

The Australian Securities & Investments Commission (ASIC) has written to life insurance companies urging them to improve product design, direct sales and retention practices, and complaints handling as they seek to expand direct-to-consumer distribution. The letter follows ASIC’s review of direct sales practices and sets out four recommendations aimed at improving compliance and consumer outcomes. ASIC’s review of documents and policies from a sample of life insurers and life insurance distributors covering July 2021 to June 2024 identified ongoing deficiencies, including dispute rates that have more than doubled since ASIC’s previous review in 2018. The recommendations focus on using complaints, claims and cancellation data and other customer feedback to strengthen product design and monitoring, enhancing quality assurance and linking sales remuneration to compliance and customer satisfaction, applying consistent standards to retention calls while streamlining cancellation processes and preventing pressure tactics, and treating complaints as business intelligence shared across business units to drive systematic improvements. ASIC said it will commence investigations or take action in response to conduct of concern, taking into account the extent to which life insurers can demonstrate they have addressed the practices highlighted in the letter.