Strong Support for Change to LIF Commission Structure

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Do you support a revised LIF remuneration model which includes a minimum commission payment designed to allow more risk advice to be delivered to Australians on low-middle incomes?
  • Yes (84%)
  • No (9%)
  • Not sure (7%)

Advisers have sent a strong message in support of a proposition to restructure the LIF commission caps.

As we go to print, 82% of those voting in our latest poll agree with John Trowbridge’s call for the law-makers to set a minimum commission level intended to result in greater access to life insurance coverage for younger and lower-income Australians (see: Renewed Call to Review LIF Commission Structure).

This clear result comes as no surprise, as the outcome would be a win/win for advisers and what would become a larger pool of potential clients for whom they could provide advice.

What’s not as clear is how the life companies might respond to implementing such a model, where the equation of the incoming premium being paid by the younger or lower-middle income policy holder and the minimum commission paid to the adviser – say $2,500 – may not be one which puts a smile on the face of the actuaries.

…And as has been the case for those arguing that any increase to commission caps would likely be accompanied by upward pressure on premium rates, it’s reasonable that such an argument might also be applied to John Trowbridge’s minimum commission proposal.

Whatever the merits of Trowbridge’s proposition – and that of FAAA GM Policy Phil Anderson’s call to raise commission caps to 80/20 – surely the time has arrived for the Government and Treasury to have this conversation with the sector. In fact, this conversation is past due.

Our poll remains open for another week and as always, we welcome your thoughts…



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4 COMMENTS

  1. If you build it, they will come!

    Simply lift the Year 1 brokerage to 80% and we can stop talking about it.

  2. I am not interested in ANYTHING John Trowbridge has to say about the life insurance industry after his last input a decade ago. Seriously conflicted cat.

    I watched him and Peter (Paul?) Switzer on Fox Money back then have this totally fictitious argument where they created scenario's of advisers having ongoing $10,000 annual premium clients that they just re-wrote year after year on 120%+ Upfront Commission – giving them $12,000 payments.

    It was absolutely wrong and failed to consider numerous factors like underwriting, GST, Licensee Fees, insurance companies enabling it and the fact ONLY ONE INSURER back then offered more than 110% Upfront – which was AMP at 127.5% because they had to! Their product was average at best and horrendously priced.

    Problem was that this fictitious and very misleading conversation was broadcast nationally so it gave many viewers a terrible portrayal of what was happening around the time LIF was being considered. Trowbridge did his nasty work, got paid for it and advisers have been suffering ever since. Trowbridge can shove it – but 80% + GST must be brought back for advisers.

    • I agree with everything you've said JADN, very well stated, especially about that dangerous clown Trowbridge. Yes, agree with all EXCEPT for your very last point – it must be 100% upfront and 20% renewals. Advisers have been shat upon too long and are still shat upon with onerous compliance and unnecessary red tape every single day. They simply will NOT return to risk writing (neither the specialists OR generalists) until they see 'reward for effort' return to the remuneration conversation. With my hand on my heart I'm seriously telling you that only 100/20 successfully starts that conversation these days – absolutely NOTHING less as it simply is not worth it regardless of what well-meaning journalists and industry commentators say.

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