Australian Unity Personal Financial Services has announced its financial planners will only be able to write insurance policies under a hybrid or level commission model from 1 July 2015.
Chief executive of the Australian Unity dealer group, Steve Davis, said advisers unanimously agreed to the policy both during professional development days and Australian Unity's adviser forum.
“We have been actively encouraging our advisers to adopt hybrid commissions for the last four years and the majority of risk insurance business placed by our advisers has been on a hybrid or level commission structure for quite a while now,” he said.
Mr Davis acknowledged that an official policy could have been brought in “a little earlier”, but said it was an important decision and wanted to take the “necessary time to fully inform and consult” with its advisers before making any changes that would affect their business.
Commenting on the remuneration proposals within the final report by John Trowbridge, chair of the Life Insurance and Advice Working Group, Mr Davis said he had two concerns on behalf of Australians.
“Firstly, given the proposed Trowbridge [Report] changes potentially represent a significant reduction in acquisition costs for insurers, we have been surprised there appears to have been no suggestion that consumers will benefit from lower premiums,” Mr Davis said.
“Secondly, if the Trowbridge recommendations are implemented, will that lead to a potential reduction in insurance advice provided to Australians?”
“If it does, the flow-on economic consequences of under-insurance could have tragic consequences at an individual family level and could create significant economic costs to the community,” he said.
Mr Davis added that this was another reason why the dealer group moved to a hybrid commission model since it is a “lower economic risk” than the proposals of the Trowbridge Report.
“The impact of moving to this model would be able to be assessed over time to see what impact this, together with the introduction of the FOFA regime, would have on the quality of advice issues that were raised in ASIC's report of last year,” Mr Davis said.
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