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: Saturday, May 8th, 7:06PM

Insurance

rss
Latest Headlines

Commission model swaps one problem for another: Ballantyne

A new commission structure proposed for the industry is unlikely to solve any of the perceived problems with the existing one, an insurer says.

Wednesday, July 18th 2018, 6:00AM 1 Comment

by Susan Edmunds

Financial Advice NZ practitioner director and PAA chairman Bruce Cortesi and industry consultant Darrin Franks have developed a new remuneration model concept for advisers.

It would involve advisers receiving commission based not on annual premiums but on up to 1 per cent of the total sum insured.

The maximum fee would be linked to the persistency the adviser had, reducing the chance of churn.

Trail commission would remain but would be paid to the adviser providing the service, not the adviser who placed the policy.

Partners Life managing director Naomi Ballantyne said there was no shortage of ideas around replacing the current commission model with other models “which all have conflicts and issues just like the current model does”.

She said it would not make sense to base commission on a sum insured because it would mean more income for advisers who dealt with younger clients, for whom it was more affordable to insure larger amounts.

When commission was paid on premiums it took into account the level and mix of cover, she said. “I don’t see any logic in doing that. I don’t think it fixes anything.”

She said it could be suggested that such a model could encourage advisers to sell more cover than a client was needed. “It doesn’t take away the potential for a conflict of interest.”

She said it was most important the the client understood why the adviser had made their recommendations and could see that it was right for them, not just for the adviser or salesperson.

“I personally don’t think there is a need to change the commission model, there is just a need to regulate the management of the conflicts – which would be required for any remuneration model.”

At Fidelity Life, Adrian Riminton, chief distribution officer, said it was important to ensure New Zealand had a thriving community of independent financial advice businesses, "which in turn ensures more Kiwis have ready access to advice and insurance protection.We welcome innovation in the market and look forward to exploring this and other options that lead to sustainable businesses and great customer outcomes.”

Cortesi has refused interviews to elaborate on the plan.

AIA, Sovereign and Asteron Life declined to comment.  

Tags: Commission Insurance Advisers Naomi Ballantyne Partners Life

« Proposed commission model 'cross-subsidisation'QFEs fail on replacement business practices: FMA »

Special Offers

Comments from our readers

On 18 July 2018 at 8:33 am Backstage said:
Have to agree with Naomi above, I can not see how it could work actuarially in the first instance. This was the way we were paid with WOL, I remember being paid $35 per $1,000 of cover. That product had what was meant to be a savings element that could have helped to fund the enormous commission. The idea is not new and does not move toward managing potential conflicts.

Sign In to add your comment

 

print

Printable version  

print

Email to a friend
Insurance Briefs

Tower builds partnerships with CSC and Sentro
Tower Insurance has continued its partnership push announcing it has formed new relationships with CSC Buying Group and InsurTech start-up Sentro.

nib Little Legends $10k Relay gives junior players a healthy funding boost
The nib Little Legends $10k relay, held during half-time at the Blues vs Chiefs match on Saturday, was won by the Pakuranga United Rugby Club.

nib helps protect future rugby stars
nib New Zealand has partnered with the Auckland Blues Super Rugby Aotearoa team to launch its nib Little Legends Little Smiles initiative, giving 1000 junior rugby players OPRO custom-fitted mouthguards – the same ones worn by the professionals.

Insurance professionals get time to shine
The Australian and New Zealand Institute of Insurance and Finance (ANZIIF) has launched an initiative aimed at showcasing the success of insurance professionals.

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
 
Site by Web Developer and eyelovedesign.com
x