Your Insurance Adviser Left the Industry: What Happens to Your Policy Now?

By Christopher Hall, Financial Adviser, AFSL 526688, Arrow Equities  |  Published March 2026

If the adviser who arranged an insurance policy has left the industry, the policy remains in force — but no one is actively managing it. Commission continues to be paid, typically to the departing adviser's former licensee, for a service that is no longer being delivered. Structural problems, coverage gaps, and loyalty tax accumulate undetected. The policy is orphaned in everything but name.

A premium increase notice is often the moment a policyholder discovers they no longer have an active adviser. They try to contact the person who set up their policy, find they have left the industry, and realise the policy has been running on autopilot — sometimes for years. For a full overview of what to do when a premium increase notice arrives, the Insurance Premium Review Guide covers the complete response framework.

Why Are So Many Australian Policies Orphaned?

Australia's financial advice industry underwent a significant contraction following the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry. The education and compliance requirements introduced in its aftermath prompted a substantial exodus from the profession.

~28,000 → ~4,000Financial advisers in Australia from 2018 to today — a reduction of more than 85%. Of those remaining, approximately 4,000 are risk-competent and fewer than 1,500 specialise in life risk insurance. (Adviser Ratings, 2024)

The policies arranged by the advisers who left did not disappear when those advisers did. They remained in force, paying premiums, accumulating commission — and accumulating problems. The clients attached to those policies are now, in the majority of cases, without anyone actively watching over their cover.

Arrow Equities finds that most orphaned clients present for help in their second or third year without an adviser — the period when problems that would have been caught and managed by an active adviser begin to become apparent. (C. Hall, Arrow Equities, 500+ policy reviews)

Australia's major life insurers. Good advice means access to all providers — not just one.

How Does Commission Work When an Adviser Leaves?

When an insurance policy is arranged through an adviser, the insurer pays an ongoing commission — typically calculated as a percentage of the annual premium — to the adviser's Australian Financial Services Licensee (AFSL). This commission is intended to act like a 'play-by' and subsidise the upfront costs incurred by the advisory firm when establishing the policy, which normally exceed the fee paid by the client many times over.

When the adviser leaves the industry, the commission does not stop. It continues to flow to the AFSL under which the adviser was previously authorised. The policyholder continues to pay premiums that include this commission component. The service the commission is intended to fund is no longer being provided.

"The commission structure in life insurance was designed within the product. When the relationship ends — because the adviser leaves the industry — the premiums paid by the policyhold does not change. The policyholder is effectively paying even more to the insurnace company than before, and missing out on adviser-asssitance that the insurer has baked into the product's cost" — Christopher Hall, Financial Adviser, AFSL 526688, Arrow Equities

Engaging a new adviser corrects this. Commission transfers from the previous licensee to the new adviser's AFSL. The policyholder pays nothing additional — the cost is already embedded in the premium they are paying. The difference is that the commission now funds the servicing adviser rather than flowing to a firm with no ongoing committment to the client.

What Problems Accumulate Without an Adviser Watching?

Loyalty tax compounds undetected

An active adviser monitors premium trajectory and identifies when a market review is warranted. Without one, loyalty tax accumulates year on year — the gap between what the existing policyholder pays and what a new client would pay for equivalent cover widens without anyone flagging it. Over three to five years, this gap can represent thousands of dollars in unnecessary premiums.

Coverage misaligns with changed circumstances

Life does not stand still. Mortgages increase. Income rises. Children arrive. Business interests develop. Each of these changes has implications for the appropriate sum insured on life, TPD, and income protection cover. Without a review, the coverage arranged five years ago — based on circumstances that may have changed substantially — continues unchanged. Policyholders may be significantly underinsured without realising it.

Payment structure remains unoptimised

Many policies arranged several years ago have never been assessed for super payment efficiency. Life and TPD premiums paid personally attract no tax deduction. The same premiums funded from concessional super contributions are taxed at 15%. Without an adviser, this structure never gets reviewed.

Disclosure gaps go unidentified

Original applications completed quickly online years ago often contain disclosure gaps — conditions managed by medication, physiotherapy attendance, mental health consultations — that an active adviser would identify and help rectify proactively. Without review, these gaps remain in place, creating potential claim risk that the policyholder is unaware of.

Superlink payment risks go unmanaged

Policyholders holding superlink structures — where a small personal component funds part of the premium — face lapse risk if that personal component goes unpaid. An active adviser monitors payment and acts immediately if a lapse notice is issued. Without one, the policyholder may not discover the issue until the policy has already been cancelled.

How Do Orphaned Policyholders Find Help?

The referral pathways for orphaned policyholders reflect the structure of the problem. Many contact their insurer directly — often in response to a premium increase — and the insurer, recognising the policyholder has no active adviser, refers them to a specialist. Arrow Equities receives a proportion of new clients through exactly this channel.

The more common pathway, in recent years, has been through mortgage brokers. A client who has recently refinanced arrives at their broker with updated debt obligations and a recognition that their insurance arrangements need to reflect their changed financial position. The broker refers them to a risk insurance specialist — because the majority of financial advisers in Australia do not provide risk insurance advice or review existing policies. Finding a specialist who will work with existing policies, rather than only writing new ones, provides significant relief to clients who have been unable to locate appropriate help.

Case Study: Loyalty Tax, Coverage Misalignment, and a Mortgage Broker Referral

Real case from Christopher Hall's review practice — identifying details removed

(C. Hall, Arrow Equities, proprietary policy review data)

A client was referred to Arrow Equities by their mortgage broker following a refinance. The client had recently increased their mortgage and was aware their insurance arrangements had not been reviewed in several years. When they attempted to contact their original adviser, they discovered the adviser had left the industry approximately four years prior.

The policy had been running without any review for those four years. A full assessment identified two primary issues.

The first was loyalty tax. The premiums had been increasing annually since the policy was arranged, and the gap between the current premium and an equivalent policy for a new client with the same insurer had widened significantly. The policy had not been to market in its entire life.

The second was coverage misalignment. The refinance had materially changed the client's debt profile. The life insurance sum insured, set at inception, was no longer aligned with the revised mortgage obligations. The client was underinsured relative to their current liability — a gap that had opened gradually and gone unnoticed.

A market review identified a current policy from a major insurer that addressed both issues: the premium was materially lower than the existing policy, and the sum insured was adjusted to reflect the current mortgage. The transition was completed without underwriting complications, and the primary measurable outcome was a meaningful annual premium saving alongside restored coverage alignment.

The client's observation on completing the review was that they had not realised how much ongoing value an adviser relationship provided until they had been without one for four years.

Note: Outcomes are specific to individual circumstances and cannot be guaranteed. Premium savings and coverage changes reflect the particular policies, health status, and market alternatives available to this client at the time of review.

What Should a Policyholder With an Orphaned Policy Do?

Three steps for policyholders who have discovered their policy is orphaned:

Step 1 — Confirm whether the policy is orphaned

Contact the insurer and ask who holds the adviser code on the policy, and whether that adviser is still active and licensed. If no active adviser is listed, or the adviser has left the industry, the policy is orphaned. Many insurers will assist with this enquiry directly and some will make a referral to a specialist at this stage. Appointments can be booked via the Arrow Equities bookings page.

Step 2 — Find a specialist risk insurance adviser

Most financial advisers in Australia do not review existing insurance policies — at best they may write new ones. Of approximately 4,000 risk-competent advisers currently practising, fewer than 1,500 specialise in life risk insurance. A mortgage broker, the insurer directly, or a referral from a trusted contact are the most reliable pathways to finding a specialist. Commission from the existing policy transfers to the new adviser at no additional cost. Understanding what a professional insurance review involves helps set expectations before the first appointment.

Step 3 — Act on the review findings

A review of an orphaned policy will typically assess loyalty tax accumulation, coverage alignment with current circumstances, payment structure efficiency, and disclosure accuracy. Whether the outcome is a premium reduction, a coverage adjustment, a structural change, or confirmation that the existing policy is appropriate — the policyholder is better informed and actively managed than before. If cancelling the policy is being considered, the review findings should inform that decision — not precede it.

Frequently Asked Questions

Q: What is an orphaned insurance policy?

An orphaned insurance policy is one where the adviser who originally arranged the cover has left the industry or is otherwise no longer providing service to the policyholder. The policy remains in force, but commission continues to be paid — typically to the departing adviser's former licensee — despite no service being rendered.

Q: What happens to insurance commission when an adviser leaves?

Commission reverts to the AFSL under which the adviser was authorised. The policyholder continues paying premiums that include a commission component, but the relationship connected with that commission is no longer being in existance. Engaging a new adviser transfers the commission to them — at no additional cost to the policyholder.

Q: How do I know if my insurance policy is orphaned?

read your renewal notice, the advisre is normally listed in the communication from the insurer. Alternatively, Contact your insurer and ask who holds the adviser code on the policy and whether that adviser is still active. If no active adviser is listed, or you have not received any service contact in the past 12 months, the policy is effectively orphaned. Many insurers refer policyholders who contact them directly to specialist risk advisers.

Q: How many insurance advisers are there in Australia?

Australia had approximately 28,000 financial advisers in 2018. That number has fallen to approximately 4,000 risk-competent advisers today, with fewer than 1,500 specialising in life risk insurance — a reduction of more than 85%. (Adviser Ratings, 2024)

Q: What problems accumulate in an orphaned insurance policy?

Loyalty tax accumulating year on year without market comparison; coverage misalignment as life circumstances change without review; suboptimal payment structure; disclosure gaps never identified or rectified; and superlink payment risks going unmanaged. The longer a policy is orphaned, the more significant these issues tend to become. (C. Hall, Arrow Equities, 500+ policy reviews)

Related Articles

• Insurance Premium Review Guide for Australian Families — the full review framework

• Understanding Insurance Loyalty Tax — how the premium gap widens in unreviewed policies

• When to Seek Professional Insurance Advice — what to expect from a review appointment

• Insurance Through Super or Personal Payment — the structure question most orphaned policies have never addressed

• Should I Cancel My Expensive Life Insurance? — why a review should precede any cancellation decision

For policyholders who have discovered their policy is orphaned, or who have not received active adviser service in more than 12 months, Christopher Hall offers a complimentary policy assessment. Appointments can be booked via the Arrow Equities bookings page.

About the Author

Christopher Hall is a financial adviser and Principal of Arrow Equities (Rose Bay Equities Pty Ltd, CAR 1304002, AFSL 526688). Christopher has conducted more than 500 life insurance policy reviews and specialises in life risk insurance advice for Australian families. He holds a Bachelor of Commerce and is a specialist life risk adviser registered with Adviser Ratings.

Educational Disclaimer: This content is for educational purposes only and does not constitute financial advice. Past performance is no guarantee of future results.

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