- Black-list serial churners (16%)
- Create better policy retention initiatives (16%)
- Simplify policy upgrade processes (12%)
- Restrict serial churners to level commission only (12%)
- Punish licensees who house serial churners (12%)
- Make level premium offers more attractive (11%)
- Offer hybrid or level commission only (10%)
- Remove upfront commissions (6%)
- Retain upfront commissions, but extend the clawback periods (3%)
- Offer level commission only (2%)
A huge response from advisers commenting on our breaking news story last week (see: Renewed Pressure on Risk Commissions) has prompted our latest poll, which asks advisers to vote on their preferred solutions to address industry sustainability.
The release last week of the 2013 FSC-DST CEO Report revealed that the number-one nominated solution offered by CEOs to maintaining sustainability in the life industry was to change the remuneration of advisers and employees. This outcome clearly touched a nerve with the adviser community, where we received a vast array of comments and suggestions, many of which offered their own contribution on to how to solve the issue of sustainability.
It is not just one component that determines sustainability; everyone has a part to play
Many advisers hold the view that offering only level commissions is the answer. But an equal number strongly disagree with this option, particularly as it would create difficulties for new adviser entrants to the industry.
Many suggest an outright banning of serial churners, while other advisers say that serial churners should only be able to access level commission.
Others have focused on premium structures, rather than remuneration structures, amid calls to make level premium insurance a more attractive/viable option for consumers.
Where do you stand? How would you solve the serious issue of life insurance industry sustainability?
One thoughtful adviser offered the view that: “It is not just one component that determines sustainability; everyone has a part to play.” We agree. So, this poll is asking you to select your top five solutions to address industry sustainability. All of the options offered in this poll have been suggested by advisers. We value your thoughts…
It is interesting that the two top initiatives are to have better retention and upgrade processes.
An implication of best interest requirements is the amount of time and processes we and the clients have to go through to do a simple increase of a existing policy, which if it was a small premium increase of $200, still requires copious requirements and many hours of work to comply.
If only level commission was available, this would equate to around $50 for at the moment, a minimum of 4 hours work.
It needs to be simplified so clients and Advisers are not scared off by doing something as basic as a policy increase. The real value to a Life Company is not the $200 premium increase, it is the premiums that have been paid for years on the current policy.
Retention means making it easy for a client and a Adviser to help keep the policy on the books. The Life Companies need to understand this, then we can move forward.
Agree with Jeremy. Our time is worth more than $50.00 an hour. Try asking for a GP report for that or less.
I agree with Jeremy. If clients want to increase their cover and the premium increase is small, it is generally not worth going through the long drawn out process of preparing an SoA, the application process etc. However as we are here to look after our clients, while going through the process of preparing the SoA and while checking out competitive premiums and policy terms, the adviser may find another insurer has upgraded their policy and the another insurer’s product is better suited to the client (and the adviser gets paid again). This is in the best interest of the client but not the current insurer. The process for policy increases should be simplified.
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