Life insurance advice remuneration is likely headed towards a fee-for-service structure, according to a senior figure within Suncorp-owned insurer Asteron Life.
“I would challenge and say that at some point in the future, there is an expectation that this industry could end up at a fee for service,” said Mark Vilo, executive general manager of Asteron Life.
Addressing a room full of life insurance advisers on Monday, he asked how they felt about this within their individual businesses. Vilo acknowledged the perception that insurers – including Asteron – had remained tight-lipped in the wake of the John Trowbridge and Life Insurance Advice Working Group’s report into life insurance advice.
“There’s been a number of advisers that have said to us and to many others ‘you’ve been very quiet,’” Vilo said. Insurance company submissions, including Asteron’s, have not been made public.
Responding to this, Vilo revealed a few of the core elements of its submission to the LIAWG review, of which Suncorp’s CEO Geoff Summerhayes was a board member.
This included a naked pricing model for life insurance advice. “We took the notion of that idea to say that perhaps if you were to provide a pure, wholesale, naked pricing – much the same as the investment fraternity do – that there may be some more margin in that for us to do so.
“You as an adviser could operate effectively as a wholesaler and dial that conversation up, depending on what you felt the value of your advice was, up to 100 per cent of the premium and beyond,” Vilo said.
He acknowledged the high emotion that has surrounded the Trowbridge report’s recommendations, with risk advisers in particular quite hostile to Trowbridge’s suggestion of a $1200 upfront advice payment and an ongoing commission of 20 per cent.
Vilo suggested this structure still appears to be favoured by Trowbridge, referring to a recent forum Asteron held, which Trowbridge himself attended and a number of Australian Financial Services licensees.
“The sense that we got from him was, structurally, there seemed to be some soundness to that framework, however, there may be some room to move with respect to some of the amounts,” he said.
The organisers of the LIAWG – the Association of Financial Advisers and the Financial Services Council (FSC) – are yet to provide their own amended recommendations based on Trowbridge’s report.
“This week, there are conversations being finalised through the FSC, with the expectation that by the end of this week there’s going to be more certainty,” Vilo said.
