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: Monday, January 18th, 7:13AM

Insurance

rss
Latest Headlines

Australian report raises alarm over life insurance’s future

The report claims clients will have to spend $15,000 over the lifetime of a claim if commission structure removed.

Wednesday, December 2nd 2020, 1:01PM 1 Comment

The report was conducted by insurtech platform Key Person Risk Management. It estimates the cost of removing commissions and replacing it with a fee for service basis (which will amount to between $600 and $1,500 a year for ongoing arrangements) is likely to make the service unaffordable for most consumers.

This could lead to extremely negative outcomes, with only the wealthy affording life insurance, and the possibility of an industry collapse.

“If restrictions are placed on a consumer’s ability to access and afford advice, the social and community impacts will result in broader under-insurance, financial hardship for people in their time of need, and an increased demand on the welfare system,” says Helen Blackford, chief executive of IOOF dealer groups Lonsdale and Millennium3.

David Whyte, chair of financial advisory firm Lifetime, agrees that any such move is likely to be deleterious for both the life insurance industry and the Australian public. He points to the example of Holland, where the commission structure was shelved in favour of a simple fee structure.

“Consumers stopped seeking advice, it left a huge hole, and more people became dependent on the public healthcare system, as only the wealthy were able to afford the associated fees,” he says.

Whyte is reassured, however, by previous Commerce and Consumer Affairs Minister, Kris Faafoi’s statement recognising the value of the commission-based model. 

“He stated that the structure worked in favour of the clients. I think the prospect of the Australian experience being repeated in New Zealand is remote.

“But we recognise that the difficulties our friends in Australia and elsewhere are having: and I would be very opposed to any suggestion of putting such a system in place here.”

Tags: Commission David Whyte Life insurance

« Using nursery rhymes to promote life insuranceNew initiative sees travel brokers retain as insurance advisers »

Special Offers

Comments from our readers

On 3 December 2020 at 8:43 am Matron said:
It's unfortunate that many decision-makers in their ivory towers overlook the fact that insurance is the one universal financial tool that makes the world's economy tick.

The issue of access to plain old barry basic insurance is much larger than simply focusing on 'customer outcomes'.

Sign In to add your comment

 

print

Printable version  

print

Email to a friend
Insurance Briefs

Fidelity Life’s transformation continues with top culture award
Fidelity Life's tech team pick up a gong at IT awards.

Fidelity Life dials up new tech
Fidelity Life says its new telephony solution deliver immediate benefits to customers and advisers.

AIA pimps up its Quick Quote calculator
AIA has enhanced its Quick Quote tool, which it says provides an opportunity to attract new, more qualified customers.

Southern Cross to bring mental health programme to kiwi kids
The programme aimed at helping kiwi kids navigate life’s ups and downs will soon be available free of charge to any primary or intermediate school in New Zealand.

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