Sovereign says new adviser regulations hit sales in 2011
New adviser regulations that came into force last year had a negative impact on new business sales at Sovereign, chief executive Charles Anderson says.
Thursday, February 16th 2012, 7:26AM 5 Comments
Despite this Sovereign recently had its A+ rating reaffirmed by AM Best.
While AM Best praised Sovereign's profitable operating performance, Anderson said the increased regulatory burden had hit the bottom line.
"Competitive pressure on premium rates and the difficulty in passing on higher regulation costs have impacted the company's new business profitability," he said.
"Adviser sales capacity has been negatively impacted by an increased demand for regulatory training and consequently the company's share of new business premiums declined in the year to June 2011."
Despite the fall in new business, Anderson said the company welcomed the new regulatory regime - including a greater focus on insurance company's credit ratings.
He said that the requirement for, and disclosure of a credible credit rating would soon be mandatory for all insurance providers.
"Some companies may struggle with this, but we believe anything that improves the industry's transparency and enhances consumer confidence is a good thing."
He also said Sovereign had fully embraced the new regulatory changes.
"As the market leader in life insurance, we see our role as setting the standard for the industry during this period of change, and into the future," he said.
"This has prompted us to invest time and money to up-skill our wide adviser base."
Anderson said that despite Sovereign seeing a fall in its share of new business premiums in the year to June 2011, the September 2011 quarter had seen something of a rebound "as adviser capacity has recovered to normal levels."
He said Sovereign saw an increase in new business over the September quarter by 24% on the same quarter last year, contributing to a 6.3% rise in overall market share.
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