Jon-Paul Hale
Jon-Paul Hale
In Australia, the Royal Commission's final report suggested moving towards an eventual ban on life insurance commissions.
But the whitepaper from Zurich found, while advisers were seen as the most reliable source of life insurance help, the cost of providing advice would be a barrier if commission was not paid.
Even basic advice would take eight hours of preparation time, the paper said, and this would cost A$2000 or more.
Only 1% of advisers thought they could charge less than A$500.
But 78% of consumers were only willing to pay up to A$500 and more than a quarter said they would not pay at all.
In New Zealand, the Government has signalled it will crack down on high upfront commission on life insurance.
But insurance adviser Jon-Paul Hale said the industry would have a hard time getting Kiwis to pay, too.
"We have a hard enough job getting people to make a will at $100 to $150. We're not going to get people paying $1000 or more for insurance advice.
"It's been socialised that this advice is free. If you look around at most industries, consumers expect the intangible and soft services to be free or at a minimal cost. Because they can get it ‘free’ elsewhere. Look at smartphones on two-year plans with the telcos.
"There is a sector of society that have both means and desire to pay a fee over commission, however, even then most don’t see the point if commission rates are relatively the same and the impact on the premium is modest.
"Talking with several clients well-educated on the financial sector, they have means and most are happy to pay a fee for advice, they do so elsewhere. When it comes to advice on financial services they have the attitude of demonstrate the value before we agree to a bill, and given the choice of fee or commissions in the life insurance space, they’d rather have take the commission option. They see it as something to ensure the ongoing engagement and service without the hassle of additional bills or regular payment arrangements."
Commentator David Whyte said opinion was turning against the idea of an eventual blanket ban on commission. New Zealanders would be unlikely to want to cover the cost, he said.
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