tmmonline.nz  |   landlords.co.nz        About Good Returns  |  Advertise  |  Contact Us  |  Terms & Conditions  |  RSS Feeds

NZ's Financial Adviser News Centre

GR Logo
Last Article Uploaded: Friday, May 24th, 10:44PM

Insurance

rss
Latest Headlines

Survey finds insurance advisers not ready for regs

To disclose or not to disclose, that is the question...or that is one of the questions contained in a survey of insurance advisers instigated by ASSET and insurance firm AIA. David Chaplin looks at some of the answers.

Tuesday, June 20th 2006, 9:12AM

by David Chaplin

Disclosure of commissions is the main concern many insurance advisers have about the new rules looming for all financial intermediaries.

With some upfront commissions higher than the annual premium clients pay for insurance cover it is understandably a thorny issue for those in the industry.

And as the ASSET/AIA survey discovered insurance advisers are clearly divided on the matter with almost half (47%) indicating they would be unhappy with full commission disclosure. However, a surprisingly large proportion (34%) of those surveyed would be happy to disclose to their clients all the commissions they receive. The remaining 19% haven’t made their minds up.

According to Michael Hewes, AIA national marketing manager, these results show that the majority of insurance advisers are not prepared for the impact of full disclosure on their businesses. He says full disclosure will be mandatory when the recommendations of the Financial Intermediaries task force are passed into law and insurance advisers must start planning now as to how that will affect their practices.

“Advisers have to go through their businesses and prepare to deal with full commission disclosure… most aren’t prepared,” Hewes says.

He says it is surprising that so few insurance advisers made submissions to the government about proposed changes to the Life Act given that the impact on them would be so “monumental”.

“But be aware, full commission disclosure will happen,” Hewes says.

When disclosure is implemented for insurance advisers, particularly those who opt for upfront commissions as high as 150 % of the premium, it will become crucial to explain clearly to their clients the value of the services they are supplying.

As well, Hewes says, disclosure will probably be a catalyst for the move to “levelised” commission insurance products, which could be a boon for advisers.

“Levelised commissions will encourage advisers to focus on an in-force book, which should improve the long-term value and saleability of their businesses,” he says.

Curiously, the ASSET/AIA survey found insurance advisers were much more comfortable disclosing “soft dollar” benefits than hard commissions. Just 24% of respondents said they were somewhat unhappy with disclosing soft dollar commissions and just 1% extremely unhappy with the concept.

Almost half (48%) were happy to disclose soft dollar benefits with the remainder not too concerned about doing so.

The proposed regulations will force all soft dollar benefits into the open, Hewes says, and as with the disclosure of hard commissions, insurance advisers should think now about how they will pass on this information to their clients and what it means for their own business models.

“We’re 100% behind disclosure of soft dollar commissions – advisers getting trips to Alaska or the Maldives for selling products just has to end,” he says. “If there were no soft dollar benefits insurance premiums would be cheaper for the consumer.”

AIA does not offer soft dollar benefits on its products as its United States parent, AIG, is bound by the strict new rules there that have banned such incentives.

« NZ life market misses international trendHealth insurance coverage rises, claims paid jump »

Special Offers

Commenting is closed

 

print

Printable version  

print

Email to a friend
Insurance Briefs

Premium relief for customers in drought areas
Fidelity Life offers premium relief to drought-affected customers

Fidelity Life relaunches customer engagement initiative
Once again Fidelity Life wants to recognise advisers who go above and beyond to deliver amazing customer service.

Asteron Life unveils product enhancements
Asteron Life is proud to announce a series of enhancements and clarifications to multiple covers across Personal and Business Insurance product offerings, reflecting its commitment to understanding and meeting the evolving needs of customers, and making it a more seamless experience for advisers.

Partners helps fund depression recovery centre
New Whakamātūtū Wellington Depression Recovery Centre gets financial boost from Partners Life.

News Bites
Latest Comments
Subscribe Now

Cover Notes - Specific news aimed at risk advisers

Previous News
Most Commented On
About Us  |  Advertise  |  Contact Us  |  Terms & Conditions  |  Privacy Policy  |  RSS Feeds  |  Letters  |  Archive  |  Toolbox  |  Disclaimer
 
Site by Web Developer and eyelovedesign.com
x