Life insurance shake-up on Fees and Commissions - About time too
We're delighted to see that finally head of life insurance regulation at the Central Bank, Mark Burke, is due to say something that will genuinely help the consumer. If you read this blog regularly you won't be surprised to hear it's about Life Insurance and the effect of high commissions on the market.
We've been saying for a while that our culture of high fees and commission is unsustainable and is a grave concern regarding the incentives given around switching providers. For us customer service starts with being up front about our commissions and the price of your policy, we think it best in these challenging times to waive the majority of the commissions and keep what we think is a fair amount. That's why our commissions are 80%-100% lower than other providers, even the "low-cost" comparison websites. We return that difference as value to you.
Don't know what you're paying for...
Most people aren't even aware of the extent of the charges commissions and fees they are paying. But as the article in the Irish Independent article also states:
"A recent report for the Department of Social Protection found that fees and charges can each make up between 21pc and 31pc of the value of PRSAs and executive pensions."
We think those types of commissions are unreasonable, unnecessary and unjustifiable and we are glad the central bank are looking more closely at this.
Change in the Commission Structure
We welcome the news that he will thinks less commission should be paid upfront, when a policy is taken out. This is part of an ongoing trend in the market, we mentioned, and welcomed, in a recent post that Friends First were dropping their override commission on their Life insurance policies, we also noted that we never took it anyway.
This move to end the front-loading of Life insurance commissions is at least a step in the right direction on the issue of advice and conflicts of interest. And it certainly would be better for consumers if commission payments were level across the life of the policy. The extent of reform remains to be seen though.
We're proud of our stance on these issues and we're proud to be the first mover in the market to really put the customer first and waive a huge percentage of the commissions our competitors take. We return this value to you, the customer, in lower premiums for the same product.
We think that the lowering of commissions is necessary in the Life Insurance market and we support anyone making reforms in the market that help protect the consumer. Go get 'em Mr Burke!