Do you agree with the Government that sales incentives no longer have a place in the life insurance sector?
- No (67%)
- Yes (28%)
- Not sure (5%)
Our latest poll seeks your response to the Government’s announcement last week that it intends to rid the life insurance industry of sales incentives (see: Government Pledges to Get Rid of Sales Incentives).
The Government has argued there is evidence that sales incentives in the insurance sector drive behaviours that are not in the best interest of consumers.
No adviser would argue against removing sales incentives if they lead to outcomes where the customer’s best interests are not being served. But advisers would also be questioning the extent to which the Government and the regulators will be including life insurance commissions when it comes to determining what they believe constitutes conflicted remuneration and sales incentives.
We know that the level of upfront life insurance commissions is in the Government’s cross hairs, following a statement from the joint regulators last week that says:
“In our view, high upfront commissions are not acceptable as they drive poor conduct and can result in poor customer outcomes.”
At the same time, though, Minister for Finance, Grant Robertson, has specifically identified “A strong response to internal sales incentives and soft commissions” as a key focus, rather than life insurance commissions more broadly.
Nonetheless, there’s no doubt that life companies will be required to address and review the commission structures they offer to the adviser community, including the level of upfront commission and the various volume bonus incentives that have historically been offered.
So, where do you stand in this discussion? Do you think the Government and regulators are over-reacting to events elsewhere, such as across the Tasman? Do you think the existing life insurance commission structure is fair and reasonable, where the focus should remain on the few who don’t do the right thing by their clients?
Or is it time to consider new perspectives – possibly even new remuneration models?