- Yes (82%)
- No (14%)
- Not sure (4%)
Advisers have delivered a reasonably unequivocal verdict in our latest poll about who should be able to access risk commissions.
As we go to print, 82 percent of respondents agree that financial advisers should be the only group in future to continue to be remunerated by life insurance commissions. Of the remaining voters, 13 percent disagree and 5 percent are unsure.
Just to refresh your memory, the motivation for asking you this question stems from issues raised by the Banking Royal Commissioner, Kenneth Hayne, after the Insurance round of hearings last month, one of which revolved around whether “…monetary benefits given in relation to life risk insurance products remain exempt from the ban on conflicted remuneration…”
While the Commissioner’s focus in raising this issue was mostly around sales representatives within the direct insurance space, we’ve pointed out that Mr Hayne has also raised the issue of conflicted life insurance remuneration in his initial response to the Financial Advice hearings in April this year.
Where will this spotlight – this renewed focus on life insurance commissions, lead? We don’t know – but it would appear that Mr Hayne and Counsel Assisting the Commissioner have the issue of conflicted remuneration squarely in their sites.
One long-standing risk adviser has commented that while he believes there continues to be a role for direct insurance offers, he thinks remuneration for its sales representatives should be restricted:
Direct insurance has a place in my view, but only as an adjunct; not as frontline. Direct insurers should pay salaries with a bonus incentive. Worthwhile salespeople will rise to this opportunity to earn a greater income and provided they’re ethical, everyone benefits.
Does this accord with your view? Or do you think that even bonus incentives should be taken off the table when it comes to remunerating direct insurance sales staff?
…And where do you stand on the broader question of whether it should only be authorised representatives who can access risk commissions in future? Tell us what you think, as our poll remains open for one more week…
I don’t believe that direct life insurance has a place, even as an adjunct. I have a number of clients who had been referred to me after establishing life insurance through a direct insurer, only to discover the very low quality of what they had in place. Thankfully, they all now have quality and appropriate cover. One example is a self-employed tradesman who had income protection through a direct insurer with a 6 month benefit period. He was unaware of this as it was not spelled out to him when the policy was established. After a full review with me two years ago, he established income protection with an age 65 benefit period. He was involved in a serious accident 6 months ago and will be off work for another 12 months at least. Not only is he receiving proceeds and will continue to do so, but he qualified for a bed confinement benefit, which meant he received proceeds after the first 4 days following his accident, something he did not have with his direct cover. Furthermore, while he was laid up in hospital, I was able to get the ball rolling and assist him through the initial claims process and will continue to do so while he is on claim! Yet with his previous direct policy, he would have been paid for a maximum of 6 months, he would not receive any extras and he would have no representation during the claim, he would have been on his own! This is but one example. There may be those who disagree with me, but there is no place for direct life insurance in this country!
Excellent summary there, Warren, and a fine outcome with your assistance. Clearly, that tradie is a happy client. Re direct life as an adjunct: I wrote that in riskinfo a few weeks back and still believe it—as a quick fix for non-complex term life only—not even TPD, because going there we’re beginning to sail on less-clear waters. Cheers.
No-one should be allowed to comment on, give advice or arrange ANY form of personal cover without being certified and having a legal duty of care to the client. And part of that certification should require committing to and passing an in depth course dedicated to insurance & everything that goes with it from properly analysing needs, understanding the underwriting process through to effective claims management. The problem isn’t limited to direct & group providers. There are too many planners for whom insurance advice adn implementation is a misunderstood add-on. It should be a specialist skill requiring commensurate education.
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