Adviser take-up of hybrid commissions for life insurance is expected to more than double over the next 12 months, according to AIA Australia.
New research, conducted by Forethought for AIA Australia, has found that nearly 50% of advisers would be using hybrid risk commissions by 2015, compared to just 20% of advisers today. However, the research also revealed that the cash flow gap that arises from transitioning to a hybrid model was viewed by advisers as an impediment to making the change.
To facilitate the transition to hybrid commissions, AIA Australia has launched a new offer which aims to help advisers manage their cash flow over the first three years. The ‘Transition to Hybrid’ program offers advisers:
- An extra 10% Year 1 commission on all new hybrid/level policies submitted in year one of the program
- 7.5% extra Year 1 commission for new hybrid/level policies submitted in year two of the program
- 5% for those submitted in year three of the program
AIA Australia General Manager – Life Insurance, Damien Mu, says that the program is about AIA Australia supporting their partners to develop and grow their business over the long term by creating extra value.
“Many advisers have told us that they want to be less dependent on up front revenues, and that they want to grow their recurring revenue. Through this program, we believe we can assist advisers in managing their cash flow while transitioning them onto the hybrid commission model, which can increase the value of their business over the long run,” Mr Mu said.
“By moving to an AIA Australia Hybrid structure, it is anticipated that advisers could increase the value of their business by as much as 71% by the start of the fourth year in the program, and by as much as 93% at the end of year ten.”
The program commences on Monday 17 March, 2014.
Meanwhile, the insurer has also updated its Priority Protection suite, issuing a new PDS, adviser guide and policy terms. The key change is the introduction of ‘Day 1 TPD’. Day 1 TPD (removal of TPD qualifying period) is now available as a built-in benefit for TPD cover, meaning the insurer will not require the life insured to be absent from employment for an uninterrupted period of three consecutive months if they suffer one of the listed ‘crisis events’.
To view the updated documents, which are effective from 1 March 2014, click here to visit our resource centre.
