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, July 23rd, 7:18PM

Insurance

rss
Latest Headlines

Churn debate: Australia moves to hybrid remuneration model

The Australian government has accepted a new, hybrid remuneration model for life insurance advisers where upfront commission is set at 60%.

Thursday, June 25th 2015, 11:45AM 1 Comment

The policy was taken to the government by industry and ratified overnight.

The policy will consist of a maximum total upfront commission of 60% of the premium in the first year.

It will also include a maximum on-going or trail commission of 20% of the premium in all subsequent years.

Also agreed to was a three-year retention or clawback period to commence on 1 January 2016 and a ban on other volume-based payments, with appropriate grand-fathering arrangements consistent with the FOFA laws.

Life insurance companies will offer fee-for-service insurance products to support advisers who wish to operate under this model.

“The Government welcomes the significant reform package received today from the Association of Financial Advisers (AFA), Financial Planning Association of Australia (FPA) and Financial Services Council (FSC) on behalf of the retail life insurance industry,” Assistant Treasurer Josh Frydenberg said.

“Having previously expressed my preference for industry to develop genuine solutions to the problems identified in the Australian Securities and Investments Commission’s (ASIC) Report 413 Review of Retail Life Insurance Advice (2014) rather than for the Government to act unilaterally, I welcome industry’s response,” he said

Transition details

The new regime will be transitioned into existence as follows:

  •     Maximum total upfront commission of 80% of the premium in the first year of the policy from 1 January 2016.
  •     Maximum total upfront commission of 70% of the premium in the first year of the policy from 1 July 2017.
  •     Maximum total upfront commission of 60% of the premium in the first year of the policy from 1 July 2018.
  •     Three year retention (‘clawback') period, to commence from 1 January 2016 to apply as follows:
  1. In the first year of the policy, to 100% of the commission on the first year's premium;
  2. In the second year of the policy, to 60% of the commission on the first year's premium;
  3. In the third year of the policy, to 30% of the commission on the first year's premium.

Tags: Churn

« Churn debate: Sovereign has nothing to addChurn debate: Underinsurance the issue, not commissions »

Special Offers

Comments from our readers

On 25 June 2015 at 3:41 pm Majella said:
Two points:
A) it's hard to imagine all 8 non-bank providers agreeing to anything, let alone such a draconian slashing of adviser revenue: one 'stand-out' would sink it...
B) does the Govt REALLY want to see the advice industry halved in a matter of months???

Sign In to add your comment

 

print

Printable version  

print

Email to a friend
Insurance Briefs

Flood claims cost almost $45 million
Insurance customers in the Canterbury region lodged 3,538 claims costing over $43.8 million in losses following the May 29 - June 1 floods according to provisional figures released by the Insurance Council of New Zealand (ICNZ).

AIA Vitality partners with Countdown and New Balance
AIA NZ has announced further enhancements to AIA Vitality in the lead up to the second anniversary of its flagship health and wellbeing programme in New Zealand.

ICNZ launches te reo Maori title
The Insurance Council of New Zealand has embraced one of the country's official languages after launching its te reo Maori name - Te Kāhui Inihua o Aotearoa.

EQC offloads disaster claim management to Kiwi insurers
From the end of June, New Zealanders will have a single point of contact for natural disaster claims with the EQC handing over management of claims to eight local insurers.

News Bites
Latest Comments
  • Underwriting delays for nib special offer
    “I have a significant objection to a point in this communication, and I have raised it with nib directly. "In future, please...”
    21 hours ago by JPHale
  • Cryptocurrency; Advisers wary but must evolve
    “Financial services getting into crypto right now has the typical feeling of the mum and dad investor jumping in. FOMO is...”
    2 days ago by JPHale
  • FMA report slams insurers
    “There's a gap, alright. However, the mainstream media has missed what Matthew pointed out here, the real impact on the consumer...”
    2 days ago by JPHale
  • FMA report slams insurers
    “@Murray If 95% of legitimate well established and capable business did not meet expectations, might the age old saying "they...”
    2 days ago by LNF
  • FMA report slams insurers
    “Meanwhile, in the real world, advisers are still trying to secure PI cover by the end of the month so they can remain in...”
    2 days ago by Adviser1
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