Upfront commission will still be payable on replacement insurance business under the Financial Services Council’s new ‘churn’ policy, announced today.
The finalised terms of the FSC’s Replacement Business Framework introduce a three-year responsibility period and a tiered commission claw-back provision.
Under the policy, where an advised policy lapses within three years, a claw-back provision will apply as follows:
- 100% of commission in the first year
- 75% in the second year
- 50% in the third year
Importantly, advisers will still be entitled to receive upfront commission on replacement business, regardless of the number of years the policy has been in place.
The FSC has moved away from a number of elements set out in the original Replacement Business Policy which it released for consultation in March this year. Specifically, the proposal sought to address the practice of churning by removing takeover terms, and introducing consistent commission claw-back provisions and a five year responsibility period in which no upfront commission was to be payable on replacement business. The proposal was met with significant concern from advisers and other industry stakeholders, with the majority calling for a more robust definition of ‘churn’.
FSC CEO, John Brogden, said the revised framework meant there was no longer a need to define churn.
The beauty is that churn is no longer relevant, because it’s just about a lapse
“The beauty is that churn is no longer relevant, because it’s just about a lapse – whether somebody lapses their existing policy because they’re getting a new one, or they just walk away because it’s no longer relevant.”
“We’ve actually been able to fall on a policy that is literally completely neutral to the issue of why they no longer hold the policy. We leave that issue alone.”
Mr Brogden said he believed the new framework would encourage more advisers to move towards fee-for-service models or to take up level commission arrangements.
He also pointed out that by dealing with the way large upfront commissions are paid the FSC had made a move to address Australia’s chronic underinsurance problem by placing downard pressure on premiums. “That’s in our view the critical element of this policy, that it will over time reduce the cost of life insurance,” Mr Brogden said.
The new policy will take effect from 1 July 2013, coinciding with the commencement of the majority of the Future of Financial Advice (FoFA) reforms.
In addition to the policy, the FSC also announced it would establish a working group to review a range of life insurance industry practices, including greater investment in technology to deliver more efficient underwriting processes, the extension of product upgrades to existing policy holders, and continuing to work with the advice industry to improve advisers’ skills and capabilities.
AFA, FPA Response
The Association of Financial Advisers (AFA) and the Financial Planning Association (FPA) have issued initial responses to the FSC’s framework, saying the policy is an improvement but that further detail is required.
The Association of Financial Advisers (AFA) has responded to the policy announcement saying that it remains concerned about exactly how the responsibility period will work.
“This is a solid first step in addressing and creating a sustainable life insurance industry,” AFA CEO, Richard Klipin, told riskinfo.
“However, client circumstances can change, and that leads to lapses. Similarly, the innovation cycle in insurance means that better products are coming to market all the time which creates an issue around an adviser’s ability to comply with the best interests duty.”
Mr Klipin added that the AFA did not believe a punitive policy that only impacts advisers was the most effective way to approach the issue, and that all parts of the advice chain needed to be considered.
Despite these concerns, Mr Klipin praised the FSC for its consultative approach to date and said that discussions between the two groups would continue.
Financial Planning Association (FPA) CEO, Mark Rantall, reiterated that the Association was opposed to the original proposal, saying the new approach was “taking some steps forward”.
However, Mr Rantall said he could not comment further until all the details had been provided by the FSC in relation to the policy. He added that the FPA was looking forward to continuing its consultation with the FSC.
“The beauty is that churn is no longer relevant, because it’s just about a lapse”……Yes rather than penalise churning lets just claw-back all policies that lapse within three years. Do this FSC honestly think this is fair? I’m shocked to think that the FPA and AFA supported this. I hope it only applies to upfront commission and not level.
A good outcome. While there is some level of commercial risk with a 3 -yr lapse, good initial advice and good ongoing service can keep this risk to a minimum.
Maybe if Mr Brogden does a good job he can maintain his salary, or if after 2 years we feel that he hasn’t he can pay back 50%.
Sounds Fair.
So my client loses his job in the third year of the policy and as a result he has to let his policy lapse,and I then get a 50% writeback.
Yep that’s fair isn’t it. (NOT)
Hang your heads in shame FPA and AFA.
amazing really….so if a clients circumstances change over a three year period, which I would sugest is not uncommon – the adviser has 50% of his income clawed back, when it has has nothing to do with the quality of the advice provided,the ongoing support or appropriateness of the advice – that seems fair. Now lets start clawing back employees salaries if over a three year period the company changes direction and work the employee completed three years earlier satisfactorily is now no longer deemed necessary…. and industry associations support this rubbish
So, let me get this straight. An adviser places a an insurance policy in 2012 and in 2015 the client is retrenched and can no longer afford to continue paying the premiums due to cash flow limitations.The client wants to continue the policy, but cannot do so.The adviser will receive a 50% write back of the original commission earned, in addition to forgoing the renewal commission that would have been received had the client not been retrenched.The adviser has not replaced, churned or twisted the insurance business and is penalised for something totally beyond their control.What about the example of the payment of a Trauma Insurance claim that reduces any remaining benefits under the policy to zero for a 12 month period until the reinstatement of benefits is re-established?
Will this be counted as a lapse until the re-instatement is applied?
If you purchased a new home in 2012 and then in 2015 you became redundant and could no longer afford the mortgage repayments and had to sell the home, should the real estate agent forgo 50% of the commission earn’t on the sale of the home 3 years prior ?
Consumers all over the world are reluctant to pay for financial services advice, so how does John Brogden think that consumers will react when provided an account for say $2000.00 for time spent providing a detailed analysis, recommendation and risk insurance strategy process, only to be told by an insurer that they cannot access insurance due to adverse risk factors ?
Will the consumer be happy to pay for advice, but not receive the product they require to ensure financial security ?
And John Brogden believes this will assist the underinsurance problem ?
I thought Bill Shorten was married to the Governor Generals’ daughter, but I think there may now be another marriage made in heaven !!
If I strip out all of the commission on a $1000 premium, the client would save $300, then my fee is $1500 and I charge an ongoing fee and a fee if they have a claim.
How is that better for the client ?
I always thought the AFA understood the real world, obviuosly not !
So if a client can no longer afford to pay their premiums after a couple of years due to unforeseen circumstances the adviser loses out? Sounds really fair…
A great plan. If a policy is set up correctly to cover needs that the client recognises, unless the need disappears, it won’t lapse inside three years. I won’t argue that there wont be exceptions, such as job loss, but hey, if you are going to worry about this, you would bullet-proof your business by never writing on upfronts anyway.
What an absolute can of worms they are opening. This is all about generating greater profits for the insurance companies and the suckers are the risk advisers who will be footing the bill. The serial churners will now wait 3 years and 1 month and proceed as usual. The rest of us risk advisers will now be penalised for the marriage breakups and unemployment issues even if the advice was exceptional if the policy lapses within 3 years. I do not use or like clauses in SOA’s relating to claw back fees if policies are cancelled within 12 months let alone 2 or 3 years. Wait until A Current Affair and Today Tonight are running pieces on the clients who have lost their jobs and now the insurance adviser or debt collectors are chasing them for $2,000 to $6,000 relating to claw backs in 18 months or more due to lapsed policies. Are you serious???. Why doesn’t the industry focus on the advisers doing the wrong thing and let the rest of us get on with insuring people appropriately. The dealer groups will also now put their fees up to help cover the increased claw backs due to the longer responsibility periods. Another whack advisers don’t need. Say goodbye to new risk advisers as who in their right mind would start as a new adviser in this extremely over regulated industry with such onerous claw backs applying. Even the best advisers have clients who get divorced or lose jobs who have to reduce or cancel policies. Personally I would have preferred the original 24 months claw back period with a level commission on replaced business only or move to a hybrid or level commission on all new business where all good insurance businesses would be better off in the long term anyway. I daresay the insurance companies finally did their figures and worked out that it would cost them a lot more in the long term if more business was written on level commissions and stayed on the books long term. Basically its all about FSC insurance company profits and to hell with the advisers. I wonder if there will be more life companies who are not members of the FSC as there is already one that I know off? This will also affect selling insurance books of business as now you will have to look at a potential three years claw back which will alter prices paid. Glad I am not retiring any time soon. Very interesting times ahead. Thanks for nothing John Brodgen and the FSC.
I don’t have an issue with a claw-back within the first 3 years if I’m replacing the policy with a new one, however if another adviser replaces the policy with a new one I’ll get a claw-back and the new adviser will get 100% upfront commission. That doesn’t seem fair, especially if a client has moved interstate and wishes to deal with a new adviser in their new local area. Also, if a client has to let a policy lapse within the first 3 years due to financial reasons, then I’ll get a claw-back. Surely that’s not the type of situation this legislation is trying to address!
Does this mean that now like in the UK, insurers are going to do credit and business checks on advisory firms?? Scenario, adviser writes a million dollars business in the first year, makes the upfront and leaves the industry… as time goes on with increased direct marketing, insurance advertising and changing needs a bulk of the clients lapse… Who is going to foot the bill? The insurer (and as such higher premiums) or the licence (higher dealer fees)???
I see, it was never about churning, just about life companies being life companies and being upset about the position licencing and our fudiciary duty put them in.How could you ignor something that was poor or over priced OR both, they had to back down, they were looking very much in conflict with the regs. as they stood. Our fudiciary dury demands that we make sure the client has the most suitable!annon.
p.s. whats the policy with year 2 and 3 trail? Is this clawed back also?
Scott, some insurers apply the clawback on the new adviser, not the old one. MLC is one of them.
I fail to understand how the FSC has “backed down on churning”. This new policy is is far harsher than the original suggestion of only allowing level commissions.
Absolutely chuffed to see common sense finally prevail here! The initial approach was never workable and like so many situations, was really focused on the speck on the windscreen, not the bigger picture ahead. You can’t tell advisers they have a fiduciary duty in one breath than tell them they can’t get paid for their work (and advice) by placing the business with another life office for the benefit of the client. I still say name and shame those advisers out there that do deliberately re-write business year after year though – its them that raised this concern in the first place!
Thanks JB for sharing the Insurers Wet Dream with us. i.e Advisers bring in the business, AND carry the risk if the insurer doesn’t stay competitive on premiums past year 1.
Now wake up to the reality; a) advisers will write less risk with any insurer trying on a three year responsibility, and b) the insurance companies are such cheeseballs that none of them will stick to the self regulatory “rules” anyway. Does anyone else get sick of the leeches we have to deal with in trying to help clients??
Woops, I think I misread the new policy. I thought it was being forgotten about altogether. Seems not so I withdraw my last comments and add the following…so, “Mr Brogden said he believed the new framework would encourage more advisers to move towards fee-for-service models or to take up level commission arrangements.” does he? Fabulous! Probably easy enough for him to say being someone who’s probably already set him and his family up and isn’t an adviser himself out there doing trying to do so. To be perfectly honest, I’m just fed up with ‘big-wigs’ interefering from their bell towers on issues like this. As I said before, these are the scratches on the windscreens and not the big pictures. This is not good policy and like most of the other advisers comments – agree it penalises advisers trying to do the right thing by clients – not those greedy unscrupulous advisers who think re-writing policies every year is a good thing. Shame on you and thanks very much!
John Brodgen’s comment that “The beauty is that churn is no longer relevant, because it’s just about a lapse” shows the contempt risk advisers are being shown by John Brogden and the FSC. The whole problem initially was only about churn. Now the greedy mongrels have done their calculations and decided that any form of lapse will be even better for them. Clearview must be rubbing their hands together as they are not part of the FSC and they are probably reviewing their new business forecasts upwards as i write this.
This is so simple it defies the imagination that the combined industry and government brains cannot figure it out. All commission should accrue at a standard annual rate at X%of premiums in force. For established advisers with a portfolio the insurer can allow an advance of up to 2 years commission repayable out of ongoing accruing commission. The loan outstanding is managed to never exceed 2 years commission on the portfolio and the risk of lapse or churn is entirely transfered to the distributor/adviser. Commission rates should reflect the fact that this risk has been fully transferred and be higher accordingly.
The FSC is just a club for the boys. For years manufacturers have turned a blind eye to churn and in fact encouraged it in the name of getting new business through their doors. They incentivised their own sales people based on new business with no regard as to how the business came to them. Manufacturers know who the churners are and fail to address it.
Now they take the easy option and just whack advisers.
There are real circumstances in the market where an adviser changes dealer groups to an institutionally backer dealer and part of the deal is that they must shift their business to products manufactured by the institution. Nothing more than encouraging churn.
If the AFA and FPA have supported this move then my membership will be cancelled.
But wait there’s more. If the Brogden plan does not work in the first 12 months claw back 50% of his salary. If still not working at the end of 2 years claw back another 25% and if still no go after 3 years claw back 100%. Seems fair based on his logic!
How does this stop churning? The serial churners (remember them? – the ones who are supposedly driving the need for this change)can still, after 2 years, move a product and make a 50% profit. It’ll slow them a bit but not much.
Still, some good will come out of this won’t it?
Obviously the insurers will use the clawed back commission to increase the new business commissions by 10 or 20% (because they’re not looking to profit out of this). That way the churners get penalised a bit, and the ‘honest’ advisers who have business legitimately fall off within 3 years through no fault of their own will not really be affected over all.
Secondly, whenever an insto sees that an application is replacing business originally written by another adviser within the last 3 years, they’ll directly compensate the original adviser out of the new business adviser’s commission.
Thirdly pigs will fly.
As advisers we need to get it into our heads that in this wonderful capitalistic society, insurance companies (like all businesses) primarily exist to look after their shareholders by generating profit. If a legal change can be affected which increases profitability they will give it a go. (It’s kind of like you avoiding or getting rid of your B & C clients really) As a shareholder in financial institutions I don’t want my dividends to reduce because they are giving profits away.
Our problem is not the instos. It is that we, the advisers, have allowed the agenda (which affects our futures)to be highjacked by other self interest groups, namely the FSC (run by the instos for instos and without any interest in the majority of advisers) and the FPA (run by an ever changing band of professional management drifters for god knows whose benefit (their own?) and without any interest in the majority of advisers).
Our only hope is to look after ourselves and the AFA is the only organisation that actually listens to, and gives a rats about what advisers really want or need. Not convinced? Compare the number of advisers on the AFA board to that of the FPA and FSC.
Put simply, if you are not an AFA member, stop complaining. You are part of the problem.
If you are an FPA member, stop complaining. You are part of the problem. Resign now (Oh and by the way, your CFP means NOTHING to your clients or your peers).
Once these all the changes we are facing come in, they’ll be next to impossible to revert.
If you care, join the AFA. If a member, call your adviser mates and convince them to join and if they’re already a member, get them to write to the AFA board members, stating their frustrations.
Also, call the head of your dealer group and give them a serve about having giving any further support to either the FPA or FSC.
Call your local member. Be outraged!!
We need to stop bleating about the “fairness” of the changes we are facing. If we continue to allow the industry agenda to be set by those individuals and organisations whose primary interests are best served by courses of action that come at our expense, then FOFA, churning, fees for service and all the other problems we face will cease to be issues for most of us.
The real issue will be finding a new job.
Unbelievable! Where did this Brogden clown come from and which circus has he been appearing at. Clients in Australia have a 100 year history of effecting insurance and having commission paid to the adviser by the Insurance Company. No one in Australia will accept effecting insurance costing say $ 2,000 per year, then get out the cheque book and write a cheque for $ 2,000 to the adviser. No client ever believes he or she is ever going to use the insurance anyway. It’s only when it happens, that clients spring to attention. I have just had a substantial trauma claim paid to a young mother who would never have been insured if a fee had to be paid upfront. It was the relatively SMALL MONTHLY payment that allowed the policy to come into force.Where does Brogden get the phrase “large upfront commissions” from. Could he please define “large” for me. What about his “large up front weekly salary.” Most of these guys do very little for their money like politicians, just use our money to get advice from others. It’s a pity these idiots didn’t have enough genuine and sincere interest to go and spend some times with advisers at interviews, not only at the selling table, but at the review table and the claim table. Their warped minds may get straightened for them. I don’t have to care about upfront commissions any more as far as income goes, but boy have they got it wrong this time. This is the geratest rule of retardation to increasing life insurance in Australia. Another nail in the coffin of Common Sense………Merv Gay
Adding to my earlier comment, I recall when Life Offices paid us “Persistency Bonuses” for keeping business on the books for 2 years or 5 to 10 years. Maybe these should be re-introduced to reward advisers who set up policies for the long term benefit of their clients?
What about companies that treat claims as a lapse? Or a significant improvement to a client’s policy such as a loading or exclusion being taken off by implementing a new policy? Do the clawbacks occur if you take Level or Hybrid from the start?
We review our clients with exclusions and loadings regularly to try and improve their policy to as close to standard as possible. This is often achieved by negotiatiing with a new insurer as rarely will the existing provider provide a lower loading, the new rules then disadvantage us as the adviser from doing that in the first 2-3 years. This is in the insurer’s interest not the client’s.
Also there are some companies that have had significant price increases in the last few years, this means the policy (definitions and terms included) that was appropriate for them previously is one they can’t afford now therefore the first question they ask their adviser is to find a cheaper premium for them or they go to another adviser to find one that will provide it to them.
I have a major issue with a claim being counted as a lapse. If the government wants to look after the client then they will ensure that a claim is not treated as a lapse while allows the adviser to administer the claim properly. Many claims in my business have occured in year 2 and 3 of the client’s policy.
Lastly what about key person policies placed due to a takeover of a company. The key person stays on for a 2-3 year handover in some cases therefore the policy is in place for that time. Insurers have been happy with level commission for this in the past.
In relation to churning, anyone that has been in the industry for awhile will know who churns their own book regularly. Us as advisers know who they are and the insurers know, the big churners have been banned from writing new business with some insurers or only allowed to take level commission.
Memo to advisers : Tell the insurers you place business with now that if they subscribe to this FSC rubbish then you will not write any further business with them. Will be interesting to see how they react as my experience is that they fall over each other to get new business!
Crystal ball says – will never come to pass! Ever.
Perhaps they should rename themselves to the ‘FSCC’… ‘Financial Services Council of Collusion’. This is nothing more than a blatant attempt at insurance companies getting together to work out how to increase profitability under the guise of so called ‘adviser churning’, and have the advisers cover their lapse risk.
Life companies and BDM’s are the first to encourage advisers to move their existing books of business, but scream ‘churn’ when it’s taken away from them. This is proven with BDM bonus structures and practices.
Now they expect advisers to foot the bill not only for possible churning but lapses in general to cover their risk and increase their profits, all at cost to the lowly adviser, unbelievable!
This new policy is worse than the original. I’d prefer the removal of upfront commission structures and hybrid or stepped structures becoming the standard. This would reduce the level of churning (if it’s even that significant) and force advisers to build long term sustainable businesses rather than cash flow focused businesses.
Pushing Fee for Service over commission is only going to increase the underinsurance issue not solve it. Clients will simply not pay the fee OR take out the cover.
And why would they when they can get such a quality product without the need for medicals while watching daytime TV! Another avenue for insurers to generate income…….
I am very curious how Mr Brogden thinks that altering upfront commissions will reduce insurance premiums?
I understand it, based on the current structures, moving to solely Level commissions will put insurers into a very awkward position as it will cost them too much money.
So pushing Level commissions will mean a review of % paid, and this will again either be slugged on the client as an increased cost, or reduces the $$ paid to the adviser for providing this advice.
Still not seeing how anyone but the insurers are having a win out of this?
The small percentage of Advisers who churn their book every 13 months will be partying hard tonight!
So, because of a problem so serious they can’t actually decide what it is, and one that’s so pervasive that the people doing it are the exception, one that is so serious it’s harming the end consumer in a way that’s hard for insurers to accurately quantify, and in an industry where not enough people have a product that we all think they need, and with a product that is priced such that it drives people away, they’ve introduced a policy that ensures advisers are left holding the bag?
Genius, really guys, genius.
Transcript of FSC meeting:
“I know what we’ll do, really get those pesky advisers, I mean churners, let’s just shaft all of them together!”
“Hurrah, good thinking!”
“Hurrah, cheers, more wine?”
“Oh, that’s enough work for today, let’s go play golf and spend some more of these suckers money.”
Anybody else starting to really damned sick of this never-ending flow of excrement rolling downhill and landing on our heads? And those of our clients?
Somebody above made a comment about overpaid bigwigs, setting the rules from their bell towers and with their fat salaries. Another called them leeches.
Both are correct and if I wasn’t worried about getting this past a moderator, I could think of a few other choice words I could use.
Ask yourself a question – if we got rid of all of the dealer groups, and all of the BDMs, and all of the management in groups like the FSC, and all of the institutional leeches and the rest of the hangers on clipping any ticket they can get their hands on, if we got rid of them all, what would happen to this industry?
Oh, that’s right – not a damn thing.
Goddammit.
What a disgraceful outcome. Where is the ACCC when industry collusion such as this is running rife?
Worse than the original proposal where the churners were the most affected. Now all advisers are negatively impacted because of the actions of a few.
You would like to assume that this will apply only to new policies after 2013?
Does it only apply to Upfront commissions or does it apply to Hybrid and Level commissions also?
Do advisers get to keep the trails in year 2 and 3 if they have been paid and the policy lapses?
As the advisers are wearing more of the risk with claw backs over a longer period, does this mean that commissions will be increased to compensate us?
The insurance companies talk of partnerships and mutual long term benefits and then they pull a money grabbing stunt like this where they are clearly the only winners.
Time will tell but I would imagine a lot of advisers will be reviewing their arrangements with insurance companies when.
I don’t know about all the other advisers out there but I am sick and tired of my business being detrimentally affected by the government and now the FSC.
Enough is enough.
Insurance policies will improve further to support retention of the policy in terms of financial crisis and unemployment.
In the meantime write sustainable business and as an IFA industry self regulate the churners by shopping them in at every opportunity, insurers also have a part to play in this.
Common sense would suggest that the churning problem is the result of a finite number of advisers doing the wrong thing.
How difficult would it be to identify such advisers and then to stop them in their tracks?
Could the FSC please answer why such a solution is unacceptable?
Obviously it is grossly unfair to hold Advisers financially responsible for Clients changing circumstances. This is a financial advantage for Insurers and a disadvantage for Advisers therefore commissions should be increased to restore the balance. Advisers should not support any Insurers who do not publically condem these changes.
Where is the detail on this option. The industry needs to be able to provide comment and feedback on this before its implemented.
Wouldn’t it make more sense to have Level comm rates payable on any replacement business written within the 3 years, which is other than a couple of new clauses or cheaper premium, essentially the same cover.
Ban takeover terms. ban pathetic little clauses which few get to use and you will see the premiums reduce.
Not sure how this outcome would affect business models – how they pay advisers – not to mention the price of a business with polices less than 3 years on the books.
Name another industry that sells something and may have to give back its income if the clients’ situation changes within 3 years and they no longer want or need that product! We can’t even get a lemon of a car replaced by the sellers….. wake up – this outcome is nonsense.
Just eliminate up front commissions altogether and bring uniform commissions on hybrid and level and we can all get on with insuring more people with cover that meets their needs.
Maybe we should claw back the income of government individuals, and departments heads appointed by them, who are thrown out within 3 terms of office. And pay for the wigs that sit in offices making ridiculous rules for the real world under the direction of these inept governments – fair thing I say …
Isn’t under insurance the the real issue – the bigger the pool of polices the lower the premiums…
Under the cover of a few churners who can be identified and removed from the industry – we ruin the businesses of all those who do the right thing!
Just let us get on with the job of insuring more people, with cover that meets their needs, for a fair return with the knowledge that our income is secure where we do the right thing by our clients.
Yet another botched industry thanks to this over-regulating bunch of union reps on govt perks forever … A red head once said in parliament to the opposition leader ….. “bring it on” ….. yes I agree 2013 federal election … bring it on….I as one of millions cannot wait!
Is this merely a proposal or is it set in stone and will happen. ?
Finally the truth! It was never about ‘churning’ it’s about lapses in the first three years, which according to internal insurance companies statistics has risen sharply since 2008 GFC impacting on their bottom line. What better way to improve that bottom line than by having a draconian mechanism to claw back the costs of marketing a product. This is a game-changer no one in their right mind would create a business with such inherant ‘contingent liabilities’ within their business further down the track. Can you imagine the ‘runoff’ of your business after you sell it, would effectively halve the value of the business. Furthermore, should a client die in the first 3 years and the term not met will there be a clawback?
Richard Klippon most advisers DO NOT support your interpretation of the FSC 3 year responsibility period.
This is ridiculous. So I see a 21 year tradie and advise him on income protection insurance. he wants the cheapest premium he can get. Two years later he goes to europe for a holiday or work gets slow and he cancels his policy. The FSC are going to take half back? So I have done all that work for a lousy 3 or $400. Thats just not good enough. Brogden reckons more advisers will charge a fee. well the fees got to be upward of $1500 with all the compliance and time spent with SOA’s etc.How many 21 yr old tradies will pay that? None that’s how many. Just wait and see how the insurers go with the reduced business when no ones left to sell their products!
What a disgrace to think that a group called the “Financial Services Council” who holds itself out to be a representative of our industry, gets the opportunity to influence policy on the life insurance industry. They are no more than a self interest group of executives from the major life companies, pushing their own barrow.
Their latest diatribe regarding the 3 year responsibility period, does nothing to fix the major issue in our industry, which is under insurance. It does however show very clearly there modus operandi, which does nothing to benefit the consumer, BUT surprise, surprise, benefits the product manufacturer.
It sounds like FSC is creating a new “Wonderland”, good for some public and general justification for their overblown salaries. Reality is so, so different.
Pretty bad all round. This beat-up is evidence that the FSC has no idea what our industry is about.
We’ve had commissions on life-risk insurance for a very long time. The public is used to it and in the main don’t have an issue with it. However, if we ask them for a fee equivalent to the commission we would otherwise earn they’d be horrified for two reasons: a) they couldn’t afford it; and b) they wouldn’t pay it – they’d simply go without. How does that address the key issue of underinsurance in our country?
Great idea similar to our uk model although we have a 4 year responsibility but we get paid 350 % upfront and no claw backs for claims.
In fact if you prefer to be paid on the drip over 4 years there is no claw back and you get paid more.
All advises open their doors to life offices for a finaancial audit.
Clients are happy they get great service, reviews and claims assistance!
Advisers are happy they are paid well and their focus is on bringing in new business.
Life offices are happy because retention isn’t a problem!
Although given the back lash I have just read above it seems that the proposal is doomed !
Recommend copy the UK model!
Cheers
UK Adviser
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