Most Advisers Resigned to Charge for Claims if Risk Commissions Banned

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Our latest poll results show that most advisers believe they will be forced to charge for their services at claim time if risk commissions are banned.

88% of advisers have answered ‘Yes’ to our question:

If risk commissions are banned, will your practice charge a fee for providing your services at claim time?

Only 7% of those responding to our poll have said they will not charge a fee at claim time if risk commissions are banned, while 6% remain undecided.

A week down the track from releasing our latest poll, we seem no closer to finding out which party will form our next government.  As we await the outcome, and the inevitable changes to the way advisers are paid, irrespective of which party takes office, advisers seem to be resigned to the fact that change is coming.

As long as risk commissions remain, anecdotal evidence suggests the vast majority of advisers will not charge their clients for their services at cliam time, but our poll suggests advisers have a realistic view of what they believe must happen if risk commissions are banned:

“… if we’re forced to charge a fee for service, then I guess there would have to be a fee charged to mediate the claim.”

On the other hand, for some advisers, there still exists a moral imperative:

It should be an article of faith for every genuine life risk adviser not to seek to recover costs from claims, no mater how long they go…

In a future where advisers may be forced to charge a service fee at claim time, one adviser has asked who will pay for the sometimes many hours of work that may be generated by errors made by life companies during a claim process?

But the simple message so far seems to be that while most advisers don’t like the thought of having to charge for their services at cliam time, there appears little to no choice in the matter if risk commissions are banned.

Our poll remains open if you have yet to have your say and add your coments…

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  • Barbara

    Our practice is currently assisting 8 clients who are unable to work due to accident or sickness to make a claim. The time and resources required to do this for a small practice that would normally only deal with a few claims a year in total is significant.
    At present we are not charging, we are doing this as a service. In some instances we received a commission for writing the insurance originally, however as nearly half the claims are with industry funds in many instances we have not received yet we are still assisting them.
    So it is tempting to charge a fee particularly as we currently have one staff member spending a significant portion of his time assisting our clients and particularly when we have also noticed that the time required to sort out the claims also seems to be significantly more when dealing with industry funds rather than life companies.
    So logic says we would be better of if we charged a fee to the client then we would be paid one way or the other for assisting clients on claim with life companies and industry funds alike.
    However some of these people are going through a period that they could only describe as one of the worst of times if their life and having someone to turn to for direction and assistance is a god send.
    Also in some instances we have no idea till we go through the whole process if it is likely the insurer is going to say that their particular reason for being off work does fall into the policy conditions so adding another cost at this time is the last thing they need.
    I think clients need to be given the choice.
    Maybe the option to choose between;
    • cheaper premiums with fees payable on recommendation, review and claim or
    • a premium that is loaded to cover this service or an extra insurance that they can pay to cover the costs associated with the extra cost of claiming on their insurance.
    Remember insurance is there to assist people when they are least able to financially support themselves.
    With over 20 years experience I have seen numerous changes which are only enabled our business to grow and flourish. Insurance commissions represent less than 20% of our income so I am sure we will survive one way or the other.
    Who knows but if the commission structure currently associated with encouraging clients to take out insurance favored the adviser – why do we have an underinsurance problem in Australia.
    Hopefully if there is a legislated change in direction that it doesn’t cause the problem to worsen and that the change favors the ability to provide more assistance to people going suffering a major trauma, sickness or accident not less.