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The vast majority of life insurance brokers are committed to the financial wellbeing of their customers, Asteron Life (Asteron) claims in the wake of the Financial Market Authority’s (FMA) damning report into life insurance churn.
Suncorp (owner of Asteron) executive general manager of distribution Cris Knell said the insurer welcomed an ongoing conversation about how life insurance brokers are remunerated and rewarded for the important role they play (for insurance).
“We will take the FMA’s recent report into account as we continuously review all our practices to ensure they provide value to our customers and stakeholders,” he said. “We believe the vast majority of advisers are committed to the financial wellbeing of their clients and we’re confident we can work together to continue to deliver outcomes that our customers need and want.”
Last week, AMP announced that, from 2019, it would scrap its offshore incentive programme for life insurance brokers in favour of customer transparency and improving customer outcomes. Partners Life and Sovereign told Insurance Business this week that they would not follow in AMP’s footsteps and would keep their holiday trips for qualifying brokers.
Fidelity Life (Fidelity) chief executive Nadine Tereora said her company supported a model “where consumers’ interests come first.”
“It wouldn’t be appropriate for us to comment on another provider’s (AMP’s) decision,” she said.
“However, the insurance industry is undergoing fundamental change. We’re responding and evolving to ensure we align with consumer and adviser expectations.
“Our adviser recognition programme is evolving to emphasise education, professional development and corporate social responsibility. Qualifications for our main recognition initiative include quality retention criteria, not just sales.
“We expect the independent advisers who advise on our products to always put their customers’ interest first - this includes disclosing remuneration and incentives in accordance with legislation.”
However, registered financial advisers (RFAs), the vast majority of brokers in New Zealand, do not need to disclose the commission they receive on policies, nor do they have to disclose the soft dollar incentives they receive from placing a client with a particular insurer.
The FMA confirmed to Insurance Business that there are about 6,800 RFAs in New Zealand compared to 1,800 AFAs. Under current legislation RFAs are not licensed or authorised by the FMA and are not required to meet the same standards as AFAs.
“RFAs are not subject to a code of conduct,” an FMA spokesperson explained. “RFAs are not obliged to actively disclose any qualifications or how they are remunerated, including whether they receive commissions or other incentives from financial product providers. However, RFAs are legally required to exercise ‘care, diligence and skill’ in carrying out their work.
“AFAs are required to be individually authorised by the FMA to give advice that takes account of the client’s individual situation on most types of investment products, including life insurance, as well as more complex products. They are required to abide by a code of professional conduct, including minimum education requirements. The code includes a requirement to place client interests first and act with integrity.”
