Are we any closer in Australia to resolving the vexatious issue of appropriate remuneration for retail life insurance sales and advice? In the face of difficulties surrounding the introduction of fee-for-service models, the recent Trowbridge Report has laid out a middle path between upfront fee and ‘renewal’ commission. But will it fly? Michael Rice sees a disrupted future ahead and potential opportunity for the Group life segment as well as overall cheaper life insurance policies for consumers.
The Trowbridge Report, Review of Life Insurance Advice, was commissioned by the FSC and AFA to respond to ASIC’s Review of Retail Life Insurance Advice (October 2014).
The theme of the report is to improve the alignment of interests across the life insurance value chain, taking into account the life insurer, the licensee (dealer group), adviser and consumer.
It is difficult to change existing remuneration models without careful consideration. When the then Trade Practices Commission (now ACCC) recommended the disclosure of commission on investment and superannuation products, the basis quickly changed from high upfront commissions to asset-based fees which ended up costing consumers much more.
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