|        About Good Returns  |  Advertise  |  Contact Us  |  Terms & Conditions  |  RSS Feeds

NZ's Financial Adviser News Centre

GR Logo
Last Article Uploaded: Thursday, May 6th, 6:14PM


Latest Headlines

Aussie new insurance business falls after commission capped

If regulators want an indication of what might happen if they regulate insurance adviser commissions, they could look to Australia.

Friday, February 22nd 2019, 6:00AM

Rob Everett, FMA chief executive

Over the Tasman, regulators have capped commission for life insurance policies at 80% of the first year’s premiums as of January 1 last year, dropping to 70% from this January and 60% from January 1, 2020.

Data by DEXX&R shows that preceded a major fall in the amount of business written.

In the 12 months to September 2018, the amount of individual lump sum – death, TPD and trauma – was at its lowest level in five years.

There was A$1.2billion of lump sum new business written in the year to September, down 14.5% on the year before.

Disability income new business decreased by 8% to $483 million over the year and group risk dropped by 2%. In Australia, the group risk market is dominated by premium received for the prison of default cover for super funds.

Only four of the top ten life companies recorded an increase in disability income new business over the year to September 2018.

AIA recorded an increase of 64.9% to A$45 million, AMP an increase of 18.9 % to A$73 million, CommInsure an increase of 21.5% to A$34 million, and ClearView an increase of 9.4% to A$22 million. That  includes indexation, aged based and voluntary increases.

Total in-force business (written by life companies remained unchanged for the year at A$15.8 billion.

The New Zealand Government has revealed its intention to clamp down on high upfront commissions and soft-dollar incentives for insurance advisers, after a critical report into the life insurance sector by the Financial Markets Authority (FMA) and Reserve Bank.

That report said commissions structures for advisers should be reviewed to ensure they were incentivising intermediaries to deliver good customer outcomes.

FMA chief executive Rob Everett appeared before Economic Development Science and Innovation select committee on Thursday.

He said the report had made a distinction between the sales incentives offered to employees and advice commissions.

“As you know, advice is more complex, because people, where people are buying products through an advice channel as opposed to directly from the provider, which generally speaking should be a good thing, people don’t like to pay up front for advice. So it puts you in a position of having to look at the structure of remuneration for the advisers that would be different than in an employed environment.

"And that is complex, it was a big part of the debate on the financial advice bill, and our view as stated in the report is that, we want product providers to work very hard at structuring commissions and other incentives for advisers so that they respond to the needs of the customer - we’re not advocating they be banned altogether.”

The Royal Commission of Inquiry into Misconduct in Australia recommended commissions be ultimately reduced to zero.

Tags: Commission Life insurance

« Servicing adviser should get trailFMA says it's not lobbying for ban on life insurance commissions »

Special Offers

Comments from our readers

No comments yet

Sign In to add your comment



Printable version  


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
  • The death of the single adviser FAP
    “change for the better is good, all for it. but change for the sake of changing is bad. should "consultants / experts" be...”
    9 hours ago by w k
  • The death of the single adviser FAP
    “I am reading the comments and article with interest. Doesn't affect me after 50 years in the industry. Driven by bureaucrats...”
    11 hours ago by LNF
  • The death of the single adviser FAP
    “devil's advocate here The headline implies it to be a bad or intimidating eventuality. So, is the "death" of CERTAIN...”
    12 hours ago by All hat no cattle
  • The death of the single adviser FAP
    “well said, tony and dcwhyte. yup, the arrogance, ignorance .... and tunnel vision "experts" couldn't see the elephant in...”
    13 hours ago by w k
  • The death of the single adviser FAP
    “I don't see anything of this or commented wholly wrong. There are plenty of advisers that I have talked to that have...”
    13 hours ago by JPHale
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