Why Risk Commission Reform Matters for Business Owners

For business owners, this is not just an adviser remuneration story. It goes to the availability, affordability and depth of professional advice at a time when SMEs are dealing with higher operating costs, debt exposure, succession risk and increasing complexity in insurance underwriting. Where a business depends on one founder, director, specialist employee or revenue-producing partner, poor access to advice can leave major gaps in key person cover, buy-sell funding, debt protection and ownership continuity planning.

The latest debate is also careful not to assume that commission caps must automatically rise. The immediate question is whether the settings should be formally reviewed. Supporters of a review argue that the current structure may have contributed to fewer advisers actively writing risk insurance and fewer Australians receiving tailored cover. Critics are likely to focus on conflicts, product replacement risks and the need for consumer protections to remain strong.

• Business clients should treat the debate as a reminder to review whether existing cover still matches current revenue, debt and ownership arrangements.
• Partners and directors should ensure insurance is aligned with shareholder agreements, loan guarantees and succession plans.
• SMEs seeking new cover should understand how advice fees, commissions and policy recommendations are disclosed.

The Government’s broader advice reform agenda is already crowded, including the fallout from high-profile managed fund failures and the ongoing Delivering Better Financial Outcomes program. That means any commission review may take time. However, the policy direction matters because access to suitable risk advice is central to whether small and medium-sized businesses can make informed decisions before a claim event occurs.

For now, business owners should avoid waiting for regulatory change before acting. If a key person became seriously ill, disabled or died tomorrow, the immediate issue would not be the commission model behind the policy. It would be whether the business had enough cover, the right ownership structure, clear claim pathways and a funded plan to continue trading. This is a timely opportunity to compare cover options and test whether business protection arrangements remain fit for purpose.