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Risk specialists will thrive but more pain to come

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3 Feb 2026 by Kris Mason, Professional Planner

Article link: https://www.professionalplanner.com.au/2026/02/risk-specialists-will-thrive-but-more-pain-to-come/

This article is an edited extract from the Professional Planner ‘Guide on Financial Advice in 2026’, download the full copy of the guide here.

Produced in partnership with MBS Insurance.

The most noticeable trend in life insurance over the past five years has been “repeated, large and unexpected” premium increases.

Those are the regulators’ words.

This trend has significantly impacted the affordability and sustainability of life insurance, making life harder for financial advisers who are having tough conversations with clients every day about why they should take out and maintain expensive cover, in the face of cost-of-living pressures and competing priorities.

In 2022, repeated premium increases, particularly in relation to products marketed as level premiums, sparked a joint investigation by APRA and ASIC. In 2023, the regulators urged life companies to improve their marketing practices and product design in order to stave off further regulatory intervention. Later this year, APRA and ASIC are expected to release additional findings and recommendations.

Against this backdrop, advisers are also grappling with significant changes to products like income protection and total and permanent disability (TPD) insurance, and higher claims experience, due in large part to mental health-related issues.

Not surprisingly, lapse rates on individual advised insurance are steadily increasing while new business is subdued. The dire situation is compounded by the declining number of financial advisers, which has plunged from 28,000 in 2019 to 15,600 in 2025.

Of those, only 185 are classified “pure risk writers” and 404 are considered “high risk writers”, according to Adviser Ratings. Collectively, they placed at least half of all new risk business in 2024.

For risk specialists, the headwinds facing the life insurance industry are also tailwinds, with an increasing number of advice businesses getting out of life insurance to focus on superannuation, wealth management and retirement planning. They are turning to risk specialists for help servicing their clients and, in doing so, managing business risk.

 

Demanding a better deal

While premium increases are not new, the size, volume and pace of rate increases over the past five years is.

Advisers understand that rates increase for many reasons including cover indexation, distribution decline and higher claims costs. Historically, increases have been gradual, with minimal impact on policyholders and advice businesses.

Over time, some clients reduced or ceased cover as their circumstances changed while others saw their cover increase, primarily through automatic indexation and age-based increases. Net net, the trail commission that advice businesses received stayed fairly static or increased slightly year-on-year.

Now they are seeing their life insurance revenue go backwards, as policies lapse under the pressure of relentless premium increases. Clients are asking more questions. They are demanding a better deal.

This is creating additional work and complexity for advisers who are already struggling with capacity constraints, and things aren’t going to get easier with premiums only headed in one direction.

Natural attraction

For many advice businesses, actively engaging clients about their life insurance is not commercially viable. They don’t have the capacity or expertise inhouse and they don’t have the desire or infrastructure to recruit or develop talent.

As a result, the number of financial planning and wealth management businesses providing risk insurance advice inhouse will continue to fall.

While there are obvious adverse short-term consequences for the life insurance industry, over the medium-to-long term, this development will underpin the success and growth of specialist risk insurance businesses.

Anecdotally, the number of specialist risk businesses is growing, as demand for professional life insurance grows, underpinned by rising levels of household wealth and debt, and the exit of the banks and life companies from the retail market.

With their soft skills and natural ability to attract clients and recruit and develop talent, risk specialists are ideally positioned to continue growing through M&A and organic activity in 2026.

Kris Mason is a partner at MBS Insurance.

 

 

 

 

 

 

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