Life/risk planners and their licensees appear to be actively canvassing the need for a true wholesale risk insurance premium rate being made available by the major insurers in the interests of moving to advice-based product manufacture, according to industry expert, Col Fullagar.
Commenting on the evolving discussion around the new Life Insurance Framework (LIF), Fullagar said he had heard plenty of discussion among licensees about a true wholesale risk insurance premium rate being made available, as distinct from the current “net of commission” offering.
However the problem they are encountering is that there is currently a scatter-gun approach being taken. He said that unless a broad cross-section of life/risk advisers and their licensees were prepared to pursue the issue in a more co-ordinated way, it was unlikely that the major insurers would be willing to act.
Fullagar will be panelist at next week’s (3 December) Money Management Life/Risk thought leadership breakfast which will canvass the wholesale risk insurance premium rate concept in the context of the LIF http://www.moneymanagement.com.au/events/upcoming-events/adviser-choice-risk-awards-2015 Fullagar said it was clear there was a level of interest amongst some licensees about using a wholesale rate product as a means of transitioning to a fee for advice model.
“My sense is that if you take out commission and also the cost of certain services which might be undertaken by the licensee such as billing, and also produce an advice-based product rather than a risk research-based one, the premium cost might be as little as 50 per cent of the current rate,” Fullagar said.
As well, he said the move to an advice-based product might also enable the winding back of some of the current product problems adversely impacting on claim ratios and therefore placing further pressure on risk insurance pricing.
Fullagar said he had been engaged by at least one licensee to pursue the matter of a wholesale rate for an advice-based risk product but he would be interested in hearing from others of a like mind in order to achieve the leverage needed to bring the idea to fruition.
