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Insurance Business | 03 Jun 2015, 12:37 p.m. Agree 0
General insurance brokers are concerned that they will pay the penalty for commission abuses mainly associated with the life sector if a suggested outright ban comes into play.
  • Perception | 03 Jun 2015, 12:56 p.m. Agree 0
    Here we go. The world of earning money providing General Insurance products and advice is about to change.
    Well this will be interesting
  • Suzanne Barley | 03 Jun 2015, 01:00 p.m. Agree 0
    Insurance Brokers continue to be hammered for the transgressions of the Life Industry under the one size fits all legislation. The compliance rules and paperwork is simply confusing the customer that it is supposed to protect. The recurring issue with declaring or even banning commissions (because it can skew the advice given to a customer) can very simply be resolved by making the commission structures the same across the board with all suppliers. Has this option even been considered?
  • Boomer | 03 Jun 2015, 02:09 p.m. Agree 0
    IBANZ - you have a challenge in front of you. Good luck with that. When will we see the Insurance broking version of "The Warehouse" open up in every town. One thing though, if the Insurers collectively decide to quote identical net terms to every broker - regardless of whether they are an independent, part of a cluster group, or a big multi-national, we may yet see more of an even playing field. I won't be holding my breath.
  • Boomer | 03 Jun 2015, 02:12 p.m. Agree 0
    Unfortunately, its not just the life side of the industry that is bringing this higher level of scrutiny about. Some broking houses, including some very high profile ones, have been slugging their clients with enormous undisclosed fees for many years now. The sooner some of those are "named and shamed" the better!
  • Giles Thorman | 04 Jun 2015, 12:09 p.m. Agree 0
    I find it staggering how this whole debate has been moved with barely a whimper from all concerned. Originally this debate started when the Industry was hit by the collapse of the Finance Companies.

    The fact that the majority of Finance Company clients had invested directly and not via a Broker/Agent was overlooked as the Public wanted someone to blame. They should have blamed the Government who had de-regulated the sector so that virtually anyone could start a finance company. The Trustee Companies also took their fee's and did very little to monitor what those Companies were doing in terms of inter company lending/borrowing. Regardless the Government who should have been made Accountable for the debacle had found someone to kick over it so they were happy.

    So in an attempt to find a source of blame the Broker/Agents who had acted as intermediaries for clients were blamed and we then got the Financial Advisers Act and the debate about Commissions for the Brokers/Agents selling Investment products began.

    In time this has come into the Life and Health industry and it seems now they wish to encompass the F&G Industry as well. This seems to be a case of divide and rule, looking at the comments from IBANZ and ICNZ above they seem to be doing a very good job of it as well.
  • Change presents Opportunity | 04 Jun 2015, 04:25 p.m. Agree 0
    I see this as an opportunity for those of us savvy to promote advice as a service in its own right with a value attached to it (rather than a hidden commission attached to a sale).

    This would remove a lot of the 'stigma' around how the public perceive insurance advisors vs other advice providing professions - people are quite accepting of paying itemised fees for advice in legal and accounting professions (yes they have their own issues).

    It would certainly help shift the emphasis away from seeing the price of the insurance product intrinsically linked to the advisor, and help the public understand that they have choice of both insurer (product, price) and advisor (fee for service).

    How could this be a bad thing for those that are customer-centric and provide outstanding service? Are we not already accepting that there are different models of distribution in a free market (budget conscious vs premium) and prepared to pay for the service level we demand?
  • Perception | 04 Jun 2015, 04:44 p.m. Agree 0
    Could not agree more. The trick is changing the perception of the buyer of insurance products that we are not just there to sell to earn money but more to give advice. It has always intrigued me that we can give advice to clients prospective clients which is really intellectual property especially if we have a certain insight. Yet the buyer does nothing until they obtain the clearance and advice for the lawyer or accountant. So to be seen to be offering our service based on a fee will certainly change our standing. But will the customers be prepared to pay the fee that we are worth considering we also have to assist with claims settlements and negotiations which we don't get paid for. Then comes the question of when do we charge the fee . From the time we do the exercise of putting a submission together to insurers (now theres a thought) or from the time we are actually appointed?. Lets see $200 per hour to also take into account overheads of running a business and tax. Hell lets call it $300 per hour
    It will also change the playing field as far as banks are concerned. Will they be able to charge a fee for every Policy sold over the counter or will they still get commission. Maybe charging a fee and doing away with commissions will make the banks (retail) move out of insurance and stick to their knitting.
    But we will have to change our message , our perception of ourselves and also our elevator pitch. It will no longer be cheaper is best to get the deal.
    Gee that is going to hurt a few insurance buyers in the head and wallet as all of a sudden they really have to start thinking about the risks they have
  • Change presents Opportunity | 05 Jun 2015, 01:53 p.m. Agree 0
    Furthermore, such a change may be part of a catalyst for shifting market cycle behaviour.

    While we will never escape it totally (with so many factors at play), removing the current intrinsic link between price of the insurance product and advisor's service may help to reduce the fear of losing clients based on price alone, and allow for more open and engaging conversations with our clients.

    Clients will begin to understand that they have complete and independent choice (in most cases) of insurer and advisor... a misconception which is currently all too common! I have often witnessed clients change advisor (reluctantly) because they did not understand the separation between advisor, insurer and price.

    If they fully understand what they are paying for they can make more informed decisions and this behaviour will surely reduce (removing some of the unnecessary cost the entire insurance industry imposes upon itself through continuous and pointless remarketing).
  • Perception | 09 Jun 2015, 11:00 a.m. Agree 0
    I think the underlying factor is that we have to expect the client to think. We have to get the client to start to think about the risks in the business. What is insurable and what is not.
    It will change the dynamics of the risk world
  • Tim | 12 Jun 2015, 08:50 a.m. Agree 0
    Giles Thorman's comments are further borne out by the Blackfort collapse being in the news this week.
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