Life insurers will pay advisers a range of commissionable premiums under the Life Insurance Framework (LIF) with only a minority opting to include policy fees and frequency loadings in the payments passed on to advisers.
Research conducted by Riskinfo, drawn from Adviser Guides and Remuneration Schedules made public to advisers, shows that while all of the major insurers will include the base premium rates in commissionable payments, only four will include policy fees and three will include frequency loadings (see: LIF By the Numbers).
The research also found that only one insurer will include stamp duty in its commissionable payments despite not being required to do so under the LIF legislation.
While the legislation has set the headline numbers around upfront and ongoing commissions at 80 per cent and 20 per cent respectively in the first year, level commissions were not set by the legislation and a third of life insurers have opted to decrease level commissions from pre-1 January 2018 levels.
The variance in commissionable premiums is an area of concern for the AFA, which has requested all life insurers include policy fees and frequency loadings under commissionable premiums from 2019 onwards.
Full details of the research are available in the Riskinfo March 2018 eMagazine.
When all these discussions were on the table, the Industry assured advisers that the commission reductions would not be too dramatic, WHY?
Because, unlike the current ( 2 years ago ) system of a complicated commission system that was confusing, there was no consistency amongst the Insurers and advisers did not have the time to try and work out exactly what they actually would receive, we were all told the New system will be 80 percent, plus GST on the total premium.
Like everything else that the Government and the Life Companies told us at the “consultation stage”.what we are promised, is always watered down and promises are like the wind. ( They change direction )
The Government spokespeople AKA Kelly O’Dwyer and the other publicity seeking Public servants who were so keen to voice their authority, need to go back and listen to their own speeches, then start putting their promises into action, by forcing the Life Companies to act responsibly.
Thanks Riskinfo for doing this work, we all appreciate you doing this important research.
Another very important request, is if you could ask which Life Companies will guarantee not to rise their premiums above age and indexation increases in the first 2 years of a policy completing,would be great.
Some Life Companies are doing this and should be recognised, as this will help advisers from being exposed to unacceptable risk and writebacks if a Life Company increases premiums within 2 years.
Nice summary Jeremy. Pretty much covers everything that the rest of advisers are thinking now. We’ve been absolutely shafted because of the actions of a small minority.
Thankfully, we don’t have a minority of politicians out there doing the wrong thing by voters and tax payers though. Oh hang on a minute…..???? #PotKettle
Dare I say it { again} I will be extremely surprised if Commissions are available at all in 4 years.
This whole “ploy” has been to oust IFA’s and make it look like everything possible was done to save them
How far will this Royal Commission go ? Not far enough I think ? It should include a whole review of the LIF legislation who fought “tooth & nail” to get it established and the real reason it was instigated in the first place.
Consumers best interest ? b#@*&t
Comments are closed.