{"id":27720,"date":"2014-10-14T14:51:45","date_gmt":"2014-10-14T03:51:45","guid":{"rendered":"https:\/\/riskinfo.com.au\/news\/?p=27720"},"modified":"2014-10-14T14:51:45","modified_gmt":"2014-10-14T03:51:45","slug":"replacement-insurance-ban-upfront-commission","status":"publish","type":"post","link":"https:\/\/riskinfo.com.au\/news\/2014\/10\/14\/replacement-insurance-ban-upfront-commission\/","title":{"rendered":"Replacement Insurance &#8211; Ban Upfront Commission?"},"content":{"rendered":"<div id=\"polls-130\" class=\"wp-polls\">\n\t\t<div class=\"pollHeader\"><strong>Should the life insurance sector consider banning upfront commissions on replacement life insurance business?<\/strong><\/div><div id=\"polls-130-ans\" class=\"wp-polls-ans\"><ul class=\"wp-polls-ul\">\n\t\t<li>No <small>(60%)<\/small><div class=\"pollbar\" style=\"width: 60%\" title=\"No (60% | 185 Votes)\"><\/div><\/li>\n\t\t<li>Yes <small>(34%)<\/small><div class=\"pollbar\" style=\"width: 34%\" title=\"Yes (34% | 103 Votes)\"><\/div><\/li>\n\t\t<li>Not sure <small>(6%)<\/small><div class=\"pollbar\" style=\"width: 6%\" title=\"Not sure (6% | 19 Votes)\"><\/div><\/li>\n\t\t<\/ul><div style=\"text-align: center\"><\/div><\/div>\n\t\t<input type=\"hidden\" id=\"poll_130_nonce\" name=\"wp-polls-nonce\" value=\"e7ce517bb7\" \/>\n<\/div>\n\n<p>Our latest poll is asking advisers what they think about the prospect of banning upfront commissions on replacement life insurance business.<\/p>\n<p><!--more-->While this proposition has been discussed in recent years as part of the debate on churning, we note in last weeks&#8217; release by ASIC of its <a href=\"https:\/\/riskinfo.com.au\/news\/files\/2014\/10\/rep413-published-9-October-2014.pdf\" target=\"_blank\">Review of Retail Life Insurance Advice<\/a> that the regulator draws a direct correlation between high lapse rates and upfront commission models (see also: <a href=\"https:\/\/riskinfo.com.au\/news\/2014\/10\/09\/asic-life-insurance-advice-review-unacceptable-level-of-failure\/\">ASIC Life Insurance Advice Review&#8230;<\/a>).<\/p>\n<p>The report makes recommendations to insurers, licensees and advisers about how each sector can position itself to reduce lapse rates and minimise poor life insurance advice in order to address what it concluded was an &#8216;unacceptable level of failure&#8217; in delivering appropriate life insurance advice.<\/p>\n<p>While ASIC recommends the industry &#8216;review remuneration arrangements&#8217;, it stops short of specifically calling for the removal of upfront commissions on replacement business or any other specific initiatives regarding the future structuring of commissions. Rather, the regulator has left it to the industry to make its own conclusions as to how it might address commission-based remuneration in order to achieve these goals.<\/p>\n<p>We&#8217;d like to know your views about this particular issue. Is there room to discuss the possibility of removing upfront commission from the replacement insurance space? Would it make any difference in reducing the incidence of inappropriate life insurance advice, as outlined by ASIC?<\/p>\n<p>Some advisers have previously told us there is often more work and effort involved in facilitating replacement business than there is in writing a new business policy from scratch. They have said the only way to be appropriately remunerated for their efforts is by way of an upfront commission structure.<\/p>\n<p>Where do you stand in relation to this question? Tell us what you think&#8230;<\/p>\n<p><a href=\"https:\/\/riskinfo.com.au\/news\/files\/2014\/10\/rep413-published-9-October-2014.pdf\" target=\"_blank\">Click here<\/a> to access the ASIC Review of Retail Life Insurance Advice.<\/p>\n<p>&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Our latest poll is asking advisers what they think about the prospect of banning upfront commissions on replacement life insurance business.<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[8,49],"tags":[],"class_list":["post-27720","post","type-post","status-publish","format-standard","category-compliance-regulation","category-polls"],"_links":{"self":[{"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/posts\/27720","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/comments?post=27720"}],"version-history":[{"count":0,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/posts\/27720\/revisions"}],"wp:attachment":[{"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/media?parent=27720"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/categories?post=27720"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/tags?post=27720"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}