Recent changes to Partners Life’ commission rates, which aim to get the right balance between the needs of customers, advisers and the insurer, attracted strong reader interest this week…
Recent changes to Partners Life’ commission rates aim to get the right balance between the needs of the customers, the needs of advisers and that of the insurer, says Andries van Graan, Partners Life Chief Distribution Officer.
Van Graan told Riskinfo that in making the commission changes Partners Life wanted total transparency with advisers in explaining the reasoning behind the changes, which come into effect this week.
He explained that while upfront and bonus commissions remain unchanged at 100% for personal and business risk covers, as of this week:
- Renewal commission moves to 7.5% from 10%
- Upfront Level Covers move to 60% from 100%
- Pendulum 25 Renewal moves to 22.5% from 25%
- Nil Expense Group Discount moves to 15% from 20%
- FAP Override remains the same at 30%
The changes were announced at the same time as Partners Life launched its new product suite into the market which the company says offers greater flexibility, choice and affordability to meet a wider range of client needs (see: Partners Life Announces New Product Suite).
…the changed commission rates are for new business only…
Van Graan emphasises the changed commission rates are for new business only, noting the renewal commission is now comparable to what the market offers.
He says that with upfront level cover Partners Life had been very generous and he doesn’t expect the change from 100% to 60% to affect new business too much as the vast majority of business is sold on Yearly Renewable Term (YRT). The higher pricing of level covers “is often a step too far for many customers.” The new 60% upfront is similar to what the market standard is.
Van Graan says the insurer knows that any downward changes in commissions will affect advisers in some shape or form and will affect their business income.
“But where we came from was getting the whole balance right between the customer, the advisers and Partners Life.”
He pointed to customers having seen premiums increase significantly over time with claims rising too and commissions were one lever in the cost structure.
…it’s important to us to have transparency about the reasoning behind the changes…
The company had thought hard about the changes from the advisers’ point of view “…so it’s important to us to have transparency about the reasoning behind the changes.”
He says the new product suite offers greater flexibility and an opportunity to manage affordability as clients’ journey through life, meaning an ability to potentially retain needed cover for longer.
“For us Partners Life Journey Plan can help advisers’ to retain customers for longer, but we know this will depend on each individual situation.”
The upfront medical commission also remains unchanged at 100% with:
- Bonus commission now at 0% from 25% of premiums
- Renewal moving from 7.5% to 5%
- As Earned is at 22.5% from 25%
- FAP Override moving to 15% x API from 30% x API