Zurich CEO defends role of commissions
Zurich Life and Investments chief executive Colin Morgan has defended the role of up-front adviser commissions in the context of ensuring insurance advice is both affordable and accessible.
In an article in the company's most recent newsletter, Morgan reinforced the company's view that commissions should remain a part of the remuneration structure applied to advisers in the life/risk sphere.
"For some time now we have made it clear that we believe consumers should be free to choose how they pay for their advice and advisers should be free to choose how they are remunerated for their services," he said. "To the extent that they allow clients to avoid out-of-pocket expenses, we believe that commissions are vital to ensuring insurance advice is accessible and affordable to as many Australians as possible."
Morgan then cited research commissioned by Zurich which revealed that more than 50 per cent of consumers would be less likely to seek insurance advice if forced to pay an ‘out of pocket' fee.
"…To the extent that up-front commissions enable advisers to be fairly rewarded for the work they have done, we believe up-front commissions also have an important role to play and we intend to continue offering that option to advisers," he said.
Discussing the impact of the Future of Financial Advice (FOFA) changes, Morgan said that while the company would occasionally make some minor adjustments, it was "committed to ensuring our remuneration structure remains competitive, sustainable and flexible enough to adjust to changes in individual adviser business models, especially in a post-FOFA environment".
Morgan also discussed the churn issue and referencing retention and lapse experience. He said Zurich's preferred approach had always been to work individually with advisers — rather than advocating any ‘one size fits all' approach.
Recommended for you
Policy and advocacy specialist Benjamin Marshan has left the Council of Australian Life Insurers after less than a year, having joined in March from the Financial Planning Association of Australia.
The declining volume of risk advisers meant KPMG has found a rising lapse rate for insurance policies arranged by independent financial advisers, particularly in the TPD and death cover space.
The Life Insurance Code of Practice has transferred from the Financial Services Council to the Council of Australian Life Insurers.
The firm has announced it will no longer be writing new life insurance policies in the retail advised and corporate group insurance channels, citing a declining market and risk adviser numbers.
