Risk Commissions Will Vary Under LIF

Life insurers will pay advisers a range of commissionable premiums under the Life Insurance Framework (LIF) with only a minority opting to include policy fees and frequency loadings in the payments passed on to advisers.

Research conducted by Riskinfo, drawn from Adviser Guides and Remuneration Schedules made public to advisers, shows that while all of the major insurers will include the base premium rates in commissionable payments, only four will include policy fees and three will include frequency loadings (see: LIF By the Numbers).

The research also found that only one insurer will include stamp duty in its commissionable payments despite not being required to do so under the LIF legislation.

While the legislation has set the headline numbers around upfront and ongoing commissions at 80 per cent and 20 per cent respectively in the first year, level commissions were not set by the legislation and a third of life insurers have opted to decrease level commissions from pre-1 January 2018 levels.

The variance in commissionable premiums is an area of concern for the AFA, which has requested all life insurers include policy fees and frequency loadings under commissionable premiums from 2019 onwards.

Full details of the research are available in the Riskinfo March 2018 eMagazine.

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