No commission cuts, says Tower Medical’s new owner

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Tower Medical Insurance’s new owner nib has no plans to reduce adviser commissions, says managing director Mark Fitzgibbon.

Thursday, November 8th 2012, 1:22PM 2 Comments

by Benn Bathgate

“We’re not going to do anything to shoot ourselves in the foot,” he said.

“We bought this business recognising that the adviser broker channel is fundamental. Would we like to sit down with the brokers and discuss existing arrangements? Yes, that’s just the way we do business, but can you read from that commission cuts? Absolutely not.”

Fitzgibbon said comments attributed to him in the New Zealand Herald about ‘funny arrangements’ between Tower and its advisers were being misconstrued.

“What I meant is it took me some time to understand all the different bits of the distribution system. Tower has its own employed advisers, it has tied advisers, it has its advisers with independent groups so funny was the wrong word,” he said.

“What I really mean is different to what we’re accustomed to in Australia. My word ‘funny’ is in no way a signal for commission cuts.”

Fitzgibbon said he realised advisers were a “crucial part” of the distribution system for Tower Medical products and that they would actually benefit from the nib takeover as the company is solely focused on health products.

“One of the issues Tower had had is that it’s been focused on other important insurance lines like life and general. We’re a pure-player insurer and we’re going to deliver some new verve, products, the level of service, the appeal and the value proposition. I think they’ll [advisers] have something more positive to sell.”

He also said around 35% of their Australian book was sold via advisers so while not so reliant on the adviser channel, he said “selling via financial planners and advisers is not a foreign concept to us.”

Fitzgibbon said the company would also leverage their direct-to-consumer sales experience to try and expand the private health cover market in New Zealand.

“We don’t see this as competing with the adviser broker distribution, rather just growing participation.”

He said this strategy of growing the market through direct-to-consumer sales would impact on rivals such as Southern Cross, but said talk of ‘taking on’ rivals was “nonsense.”

“We see the potential to grow this space, not simply churn the existing level of market.
 

Benn Bathgate is a business reporter for ASSET and Good Returns, email story ideas to benn@goodreturns.co.nz

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