{"id":27799,"date":"2014-10-21T22:29:38","date_gmt":"2014-10-21T11:29:38","guid":{"rendered":"https:\/\/riskinfo.com.au\/news\/?p=27799"},"modified":"2014-10-22T07:12:26","modified_gmt":"2014-10-21T20:12:26","slug":"keep-upfronts-on-renewal-business-advisers","status":"publish","type":"post","link":"https:\/\/riskinfo.com.au\/news\/2014\/10\/21\/keep-upfronts-on-renewal-business-advisers\/","title":{"rendered":"Keep Upfronts on Renewal Business &#8211; Advisers"},"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=\"dfa561f933\" \/>\n<\/div>\n\n<p>The majority of advisers think upfront commissions should be retained for replacement business. But the jury is still out on this question.<\/p>\n<p><!--more-->As we go to print, 58% of respondents to our poll believe upfront commissions should be retained as an option for replacement policies. One third agree that upfront commissions for this segment of business should be banned, while 9% are undecided.<\/p>\n<p>Advisers supporting the retention of upfront commissions on renewal business have given their reasons:<\/p>\n<p><em>&#8220;&#8230; we need to stamp out churning but in many cases a replacement insurance contract is in the best interest of the client, and to provide this advice the adviser deserves to be compensated&#8230;&#8221;<\/em><\/p>\n<p><em>&#8220;If you ban upfront commissions on replacement policies, it creates another barrier to entry for new advisers who don\u2019t yet have recurring income&#8230;&#8221;<\/em><\/p>\n<p><em>&#8220;&#8230; just because you\u2019re replacing a policy, doesn\u2019t mean there isn\u2019t a whole lot of work and expertise involved. Clients circumstances change. Clients health changes. Insurance products change. And what if the previous advice was from another adviser?&#8221;<\/em><\/p>\n<p>One adviser suggested product manufacturers were, at least in part, responsible for the momentum driving replacement policy business in the first place:<\/p>\n<p><em>&#8220;Life companies themselves are the reasons replacements occur as they attempt to out underwrite, out feature, out commission etc., each other at least once every year!&#8221;<\/em><\/p>\n<p>While another adviser questioned the actual definition of &#8216;replacement business&#8217;, a further comment suggested this debate is more complex:<\/p>\n<p><em>&#8220;I do not believe that a straight ban on upfront commissions for replacement business is that simple. There are many good reasons why a policy may be replaced. If there are benefits to the client then replacement may be the best option. A lot of work goes into the client review process and we must be remunerated for that work. The answer I believe is more around \u201cwhy\u201d the business is being replaced. With the likelihood that clients will need to sign an SoA in future why not add more into the replacement table section and have a requirement where the client has to sign off against this.&#8221;<\/em><\/p>\n<p>These points all support the proposition that upfront commissions on replacement business should be retained. But in the broader debate about the quality of life insurance advice (see: <a href=\"https:\/\/riskinfo.com.au\/news\/2014\/10\/09\/asic-life-insurance-advice-review-unacceptable-level-of-failure\/\">ASIC Life Insurance Advice Review<\/a>), is this one area where advisers may need to re-consider the manner of their remuneration?\u00a0 Tell us what you think, as our poll remains open for another week&#8230;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>The majority of advisers think upfront commissions should be retained for replacement business. But the jury is still out on this question.<\/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-27799","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\/27799","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=27799"}],"version-history":[{"count":0,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/posts\/27799\/revisions"}],"wp:attachment":[{"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/media?parent=27799"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/categories?post=27799"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/tags?post=27799"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}