The current proposal to ban insurance commissions in superannuation would worsen Australia's underinsurance problem, according to independent platform provider Wealthtrac.
New research by the firm has indicated that 53 per cent of financial advisers believe a ban on commissions, as recommended in the Cooper review, would exacerbate the current underinsurance issue.
"However, an overwhelming majority of advisers - 63 per cent - indicated that if life insurance available via a platform was to encompass the benefits of retail insurance, then the underinsurance issue may improve," Wealthtrac managing director Matthew Johnson said.
"If we do not come together as an industry and agree on a way forward, then Australians will remain disadvantaged at a time when they need it most."
Johnson said a resounding message from the research - conducted on Wealthtrac's independent advisers in October - was that banning commissions is not the answer.
"Insurance is actually sold, it's not bought. Now advisers sell insurance ... no one walks into an adviser's office and says 'I need insurance' and that's because of the culture [Australian's apathy towards insurance]," he said.
"If you need something sold in order for people to take it up, you actually need to pay people who are selling it a reasonable amount of income.
"Now if you're trying to ban insurance through super, then who is going to drive it? Are you going to leave it up to the apathetic investor or member to put their hand up and say, 'Yes I do need insurance Mr Cooper and I'll handle it myself?' The answer to that is no. So it will only add to the industry problem."
The Cooper review's aim for Australians to have adequacy upon retirement would not necessarily be solved by removing commissions on insurance, Johnson said.
"I can show you a numerous amount of industry funds that are 100 per cent more expensive than group insurance offered through platforms," he said.
"So if you really want to talk about price, you talk to the industry funds who aren't paying a commission but are charging as if they are paying commissions and more."
