Lumley's exit shocks advisers

Lumley Life's decision to stop writing new business in New Zealand has shocked advisers in its National Partnership.

Monday, February 16th 2004, 10:25PM

Vern Mardon, chairman of the partnership group, says late last year the decision was made that now the ownership of Lumley had been resolved, it was time to rapidly expand the partnership.

Lumley Life in Australia and New Zealand was to become part of new owners PrefSure, a holding company for South African parent Capital Alliance Holdings, from March 31.

PrefSure group managing director Russell Howden said yesterday that the group will focus on its recent acquisition of the Australian business, closing its Auckland office, and continue to explore opportunities in Australia.

Lumley said was talking to New Zealand groups interested in buying the book. But Mardon says the partners have yet to hear anything on the grapevine.

"However, where one door closes, another opens," Mardon says. "A good New Zealand-based insurer now has the opportunity to purchase a quality book of business and develop a special relationship with some outstanding advisers."

Lumley’s business is been based around its "National Partnership" model where the company gets together with advisers who share "a similar philosophy and beliefs".

The idea is that advisers’ remuneration is skewered towards renewal commissions, as opposed to up front ones, and in return Lumley helps advisers build their businesses.

Black told Good Returns earlier this year that this is "arguably quite a hard way to enter the market" as the industry tends to pay risk advisers large upfront commissions.

However, he believe then advisers who adopted the model have better cashflows in their business, and over time the industry would move towards having a greater emphasis on renewal commissions.

Mardon says the national partners helped with designing Lumley a suite of products rated the best on the market by Plan Tech Research.

"A business relationship based on mutual trust was formed for the benefit of clients, partners and Lumley Life," Mardon says.

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