Speaking at an adviser roadshow held yesterday in Sydney, Asteron Life executive manager Mark Vilo outlined the main points of its response to the Trowbridge Report and commented directly on the level commission proposals.
“One of the things we put forward in the response was the idea of having a form of naked or wholesale pricing, in the same way that the investment fraternity do,” he told the audience.
“The adviser acts as a wholesaler. If the client comes to Asteron Life, they pay the full rack rate, but if they go via adviser they get the wholesale rate and the advisers can dial up the fee.”
Mr Vilo said that the insurer’s submission looked closely at the different remuneration structures put forward by Trowbridge.
“In the response we provided pros and cons for each of those and whether they would address the challenges of our industry,” he said.
Speaking to Risk Adviser, Mr Vilo said the challenge for advisers would be to put a value on their advice and that it was entirely possible that the life industry would move to an exclusively fee-for-service model at some point in the future.
“Advisers should start thinking about their business models and whether or not their current model is future proof,” he said.
“At the end of the day, it’s about advisers putting a value on the service they provide.”
In the wake of the Trowbridge Report’s release, life insurers have come under pressure from members of the risk advice community to reveal their positions on risk remuneration.
Oooh that’s a good alternative “advisers should do….” Lyndon!!!
That’s the funniest thing I have read. (Naked Commission) All Asteron is passing the buck. They have no backbone to take the real issue to Browbridge, that is “Churning” and as it has been said by many correspondents it can easily be controlled at Life office level. Has Asteron advised Trowbridge of this fact. If not they and every other Life Office are offering misleading information. Do they not have responsibilities as Directors and Officers, do their Shareholders know the game they are playing. Maybe we need to contact the Australian Shareholders Association. Has any Life Office come out and declared they can fix the problem at their end. Then we don’t have a problem. It’s also What a weak response from a Risk provider. It is simple and I have said it before, just do not write their products. How can we trust a provider like this.
Just about everything I’ve seen is about what the adviser needs to do and the way in which we get remunerated. I’m yet to see any proposals from insurers (unless I have missed them) as to how the insurers are going to change their ways and how the clients will benefit. It seems to be that the advisers are the ones that are carrying the can.
It’s simple advisers sell the product at full rack price no discount and invoice the insurance company our hourly rate a of $400 an hour, the insurance companies will refuse to pay that. So why commission simply that’s why, but another solution leave it as it is
Ive personally been advocating that for years..but the change in the advisers and the clients mind re the perception of value being created cannot change overnight. Every(! ) stakeholder must be educated to see what is taking place before,during and after the risk scenario is played out and completed at claim time. Insurance is not a product a science
I think its going to be a long hard road back Mark. Asteron/Suncorp talks about supporting the independently owned licensees but its hard to see in your actions. You can always back self interest. The industry is making the advisers pay for lower bond rates which impact your profit/pricing/reserving ( not our fault but I am sure someone will find a way to blame advisers for lower interest rates), poorer claims experience ( maybe underwriting practises need a review), worsening lapse rates which must partially come from the baby boomers no longer needing insurance. Accept churning goes on but not by the majority but by the minority. Accept that some business practices need changing as well but the issue is quality of advice. It’s not all about remuneration. Quality advice is the problem we need to fix. What is Asteron offering to help with quality of advice? Maybe that’s where you should start the road back. The first thing the industry can do is acknowledge this is not just an adviser problem.
So their suggestion was do what BT has had in it’s quoting software since launch (see Insurance Administration Fee or Advice service fee options under policy group). Take up is poor because the amount you need to charge a client for the time taken is too high. Cost to serve needs to be addressed before we can realistically charge a fee that the “every man” will pay. – and I’m an advocate of that future.