NEWS September 04, 2025
Red tape stalls growth in Australian life insurance advice
Industry pushes for urgent reforms to unlock adviser potential
Australian life insurance professionals are facing ongoing regulatory challenges that are limiting their ability to provide risk advice, according to PPS Mutual CEO Michael Pillemer.
Speaking after the release of Adviser Ratings’ 2025 Australian Financial Advice Landscape Report, Pillemer called for urgent action from policymakers to address what he described as “handbrakes” on the sector.
Sector leader highlights persistent barriers
Pillemer said the current regulatory environment continues to create obstacles for advisers, particularly in the delivery of personal financial advice.
“It has been two-and-a-half years since the Quality of Advice Review recommendations were released, and most of the meaningful reform hasn’t happened yet. It’s just taking so long,” he said.
Adviser workforce and market demand
The PPS Mutual CEO noted that adviser numbers have nearly halved over the past decade, which has contributed to increased demand for risk advice among consumers.
“There’s a lot of demand at the higher end because they tend to be the established advisers serving that sector and because there aren’t many new specialists coming into the industry,” Pillemer said.
He added that existing advisers often have strong support systems and referral networks, allowing them to meet the needs of their clients, but the middle and lower segments of the market remain underserved.
With the minimum qualifications deadline for advisers set for Jan. 1, 2026, Pillemer warned that further reductions in adviser numbers could occur unless regulatory barriers are addressed.
He argued that the complexity of compliance requirements is discouraging new entrants and limiting the ability of advisers to serve a broader client base.
Calls for reform in advice documentation and remuneration
A key issue identified by Pillemer is the current approach to Statements of Advice (SoAs).
He described the process as unnecessarily burdensome and costly.
“The client is never going to read the 60- to 70-page SoA. They might if it was five pages. The cost in producing the SoAs is prohibitive. It’s a no-brainer and should have been implemented in the first six months following release and acceptance of the QoA Review recommendations,” Pillemer said.
Pillemer also addressed adviser remuneration, advocating for a review of the Life Insurance Framework (LIF) commission structure.
He supports a return to the 80/20 hybrid model, which he believes would better support the long-term sustainability of advice businesses.
Industry facilitation and consumer outcomes
According to Pillemer, the industry and regulators should do more to promote advised life insurance solutions.
He pointed to data from the Australian Prudential Regulation Authority (APRA) indicating that claims are more likely to be accepted when an adviser is involved.
Pillemer also highlighted differences between group superannuation schemes and individual advised insurance, noting that group policies may appear more generous but often lack guaranteed renewability and can be subject to exclusions.
He cautioned that consumers may not be fully aware of the limitations of group or direct insurance products, and called for greater industry collaboration to ensure that the benefits of professional advice are communicated clearly.
Streamlining processes and supporting new entrants
Pillemer emphasised the importance of making it easier for advisers to manage policies, including tasks such as quoting, increasing cover, or changing ownership.
He said reducing administrative burdens would allow advisers to focus more on client needs and improve business efficiency.
In closing, Pillemer reiterated the need for swift regulatory reform to support both established and new advisers.
“We just can’t afford to bring in a new generation of advisers into the profession where there’s a perception that the life insurance advice proposition is under-paid and under siege,” he said.
Life Insurance Code of Practice under independent review
These industry concerns coincide with the announcement by the Council of Australian Life Insurers (CALI) of an independent review of the Life Insurance Code of Practice.
Peter Kell will lead the review, which begins on Oct. 1. The review aims to ensure the code remains relevant to current consumer expectations, aligns with legal requirements, and is accessible to both industry professionals and policyholders.
The code sets out mandatory standards for life insurers in areas such as product development, claims handling, and complaints management.
