Inside Money: Cold calls tipped for NZ as Australians agree on insurance reforms

Selling insurance or lead generating for advisers? Photo / Thinkstock

Out of the blue last week she called offering me a deal I couldn't refuse.

The offer, as relayed to me, was a "free" consultation with Sky, Phil or Matt to discuss my health and life insurance needs.

"They can come around for an hour or so in the evening... free of charge, no obligation," she said. "It sounds good doesn't it?"

About as good as watching the Twilight movie series back-to-back, I thought. But the vampire reference was useful: they can only enter your house if you invite them in.

The company, she said, was called Premium Health Insurance, which, confusingly, "is not an insurance company".

"So you're a lead generation business for insurance advisers," I asked her.

"Everybody's got to make a living," she said, somewhat defensively.

I wasn't knocking her career choice. Cold-calling is a legitimate, if irritating, sales technique. And insurance, as everyone knows, is sold, not bought.

Refreshing the client pool is a constant effort for many life insurance advisers.

It is possible that cold-calling introduces uninsured clients into the mix. But more likely, the sales pitch was aimed at switching existing life insurance policy-holders - who, by definition, have already bought the concept - to different products.

Was my cold-call a churning point? I never found out. I will be busy most evenings for the rest of my life.

As covered in this column more frequently than I'd like, life insurance churn is big news this year.

The subject has been specifically broached in the ongoing review of New Zealand's Financial Adviser Act (FAA).

Much of the churn concern was prompted by an Australian life insurance investigation, which culminated last week in a series of reforms proposed by the industry itself.

The proposals, welcomed on board by Australian assistant treasurer Josh Frydenberg, more or less follow recommendations issued in the earlier Trowbridge Report .

Under the proposals, which seem almost certain to progress, upfront and ongoing life insurance commissions will be set at a maximum of 60 per cent of first-year premiums (after a phase-in period) and 20 per cent respectively.

"Life insurance companies to offer fee-for-service insurance products to support advisers who wish to operate on a fee-for-service basis," the proposal document says.

With Australian life firms dominating the NZ market, I expect to hear calls for similar reforms here soon - but not tonight, I'm busy.