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24 April 2017
The reduction in adviser commission payments will remove some risk from life insurers’ businesses, according to Fitch Australia director John Birch.
“I think from the life insurers’ point of view, it is not a bad thing,” he told Life+Health insuranceNEWS.com.au. “It takes away the vulnerability of the insurer paying a commission and then having to see how long the policy lasts.”
Mr Birch says it will reduce the risk of policies lapsing before commissions are factored into insurers’ costs over a number of years.
“It will align the interests of the adviser and the insurer better, and reduces that income volatility.”
In a new report on the Australian and New Zealand life insurance markets Fitch rates the industry as stable.
“Fitch expects life insurance sector earnings to improve in Australia [next year] and remain at a high level in New Zealand. The Australian life sector had years of strong profitability, but problems had developed that are still being resolved.”
The ratings agency expects lapse and claims rates to stabilise but remain high in the next year.
It notes insurers are tackling these problems through expanded retention and claims teams, and improved claims management systems and processes.
“New Zealand’s life insurance sector has not experienced the same adverse claim and lapse developments as Australia,” the report says.
“But competition and tax changes are pressuring profitability.”
The report notes New Zealand advisers are still paid upfront commissions of more than 200%, but changes in Australia may cross the Tasman, especially if the same financial institutions apply pressure for reform.
Fitch says Australian life premiums have moderated this year, although from a much higher level.
“We are expecting net policy revenue growth to remain subdued [next year] as a result of constrained household finances,’ the report says.
18 April 2017
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11 April 2017
Westlawn Insurance Brokers is an established and respected local company with nine branches across Northern NSW. We are looking for an Insurance professional with drive and commitment to join our Lismore team.
11 April 2017
With responsibility for Professional Liability across both Australia and New Zealand, this role will require delivery on product strategy, profitability, growth and efficiency.