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AIA introduces new commission option

AIA is to introduce a new pendulum commission model that will enable advisers to swap lower upfronts for more renewal commission.

Friday, April 15th 2016, 6:00AM 2 Comments

by Susan Edmunds

It is offering an option of 130% upfront and 20% renewal on core risk products.

Advisers can still choose the standard option of up to 200% upfront commission and 5% renewal in the policy's first two years, 7.5% in the third and fourth years and 10% a year from the fifth year on.

But chief distribution officer Graeme Edwards said AIA hoped the higher renewal option would be seen as adding value to adviser businesses.

AIA previously had a model of 110% upfront and 25% renewal available but Edwards said discussion with advisers revealed many felt 130% and 20% was a better option. “The extra first year helps with cash flow while still building a good renewal base.”

He said advisers could effectively create their own commission structures by choosing to take different portions on different structures.

“We’ll keep listening to the advisers and adapting as per the feedback we receive.”

The pendulum option is not available on Real Health policies and AIA has lower commission on some products when they are not bundled with life cover.

Edwards also told advisers AIA had no plans to change its new product and pricing.

Tags: AIA

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Comments from our readers

On 22 April 2016 at 12:17 pm Mike Naylor said:
My congratulations to AIA for this. Other insurers need to follow them. Sue should have mentioned Fidelity's lead in this area, though.
On 27 April 2016 at 12:48 pm Backstage said:
Do you sell insurance Mike? Why congratulations...? Whilst this is good for advisers that want this it is not new. We have had various forms of this for years... and its always been a tricky balance for advisers as often a dollar today is worth more than a dollar tomorrow (NPV).

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