Leading life insurer AIA Australia has launched a new hybrid commission program, giving advisers an opportunity to increase the value of their new business.
Called ‘Transition to Hybrid’, the program is designed to help advisers manage their cash flow as they move to a hybrid commission model, which can provide greater value than upfront structures over time.
Advisers that join the program can receive:
– An extra 10 per cent Year 1 commission on all new Hybrid/ Level policies submitted in year 1 of the program;
– 7.5 per cent extra Year 1 commission for new Hybrid/Level policies submitted in year 2 of the program; and
– 5 per cent for those submitted in year 3 of the program.
As a result, advisers can receive 90 per cent upfront commission for Hybrid New Business policies submitted in year 1 of the program, 87.5 per cent for New Business policies submitted in year 2 and 85 per cent for the same in year 3. Renewal commission, in respect of the second and subsequent years of a policy, remains unchanged.
The news comes on the back of research through Forethought that revealed that the take up of Hybrid is expected to more than double in the next 12 months, increasing from 19.7 per cent to 44.7 per cent of advisers respectively. While the research revealed advisers’ preference towards hybrid commission structures, the cash flow gap that would result by moving to such models was seen as an impediment. The ‘Transition to Hybrid’ program will cover one third of the anticipated gap.
AIA Australia General Manager – Life Insurance, Damien Mu, says that the program is about AIA Australia supporting their partners to develop and grow their business over the long term by creating extra value.
“Many advisers have told us that they want to be less dependent on up front revenues, and that they want to grow their recurring revenue. Through this program, we believe we can assist advisers in managing their cash flow while transitioning them onto the hybrid commission model, which can increase the value of their business over the long run.”
By moving to an AIA Australia Hybrid structure, it is anticipated that advisers could increase the value of their business by as much as 71 per cent by the start of the fourth year in the program, and by as much as 93 percent at the end of year 10.
The ‘Transition to Hybrid’ program will commence Monday 17 March
