Longer clawback period 'would be welcome'

The Australian Financial Services Council last month confirmed it would not proceed with its controversial new framework, which was designed to discourage churn.

It proposed a three-year responsibility period on all new life insurance policies and was widely opposed by financial advisers.

The clawback was to have been 100% if a policy was cancelled in the first year, 75% in the second and 50% in the third year.

The situation was being monitored closely by insurance companies in New Zealand, according to a source, who said that insurance companies would still lose money on a policy cancelled within three years, even with the clawback.