Partners Life has released a document to highlight the work an adviser carries out over the duration of a long—term life insurance contract and where their commissions are impacted by that work.
The insurer stated it is a response to commentary it has seen about the industry and the relevance on the current commission structures for non-aligned advisers.
It said it was disturbed by the increasing regularity of comments on ‘renewal commissions’ being received by advisers who ‘do nothing’ for it.
“There has been virtually no commentary about the nature of the work many advisers do on behalf of their clients, and for which renewal commissions on their own provide minimal compensation,” it stated.
The insurer said it has provided the document to media, the Minister’s office, FMA, Reserve Bank and MBIE.
“We believe it is essential for these audiences to truly understand the nature of a long-term life insurance contract, and the changes that are required along the way to ensure the client’s cover evolves appropriately as their circumstances change over their life-time,” it stated.
“They also need to understand the likelihood that this evolution of cover can and will occur, if there isn’t an adviser ensuring that it happens.”
Some of the steps in the process where the document listed commission impact as ‘none’ included:
- First and subsequent appointments with the client
- Submitting the application and underwriting process
- Policy maintenance
“Of course it also identifies to those audiences the type of work that ’should’ be happening in respect of an adviser’s clients over time, which could be problematic for anyone who doesn’t actually proactively service their clients,” it stated. “This, of course, is the very behaviour that has led to the negative perceptions around renewal commission in the first place.”
Partners Life said it relies on its advisers to provide this ongoing advice to clients over the life of their policies and to take the actions to amend the client’s policy accordingly as their lives evolve.
“The renewal commission asset, potential opportunities for new upfront commission on increased premiums, and the referral opportunities that satisfied clients provide, are the key ways in which advisers benefit from providing this ongoing service to their clients,” it said.
Click here to view the document.