Insurers rethink agreements
Advisers should expect to see their agreements with most insurers rewritten over the near future, one insurance commentator has warned.
Wednesday, July 10th 2019, 6:00AM
The way insurers deal with advisers is to undergo significant change as a result of the Financial Services Legislation Amendment Act, and the Government’s work on the conduct of financial institutions.
It has signalled it wants product providers to be more accountable for the actions of their intermediaries.
AIA has written to its advisers with an updated agreement with a code of conduct and adviser obligations including an expectation that advisers provide a service in return for renewal commissions and can show their records in cases of dispute.
It includes the right to transfer the servicing of clients to other advisers, although renewals would not necessarily automatically transfer, too.
Commentator Russell Hutchinson, of Chatswood Consulting, said the changes were not unexpected and seemed specifically designed to give AIA the necessary tools to meet the expected requirement to have effective oversight of the actions of financial advisers distributing insurance products on its behalf.
But by comparison, Fidelity Life said it would leave agency agreements “as is for now”. “We currently have no plans to change our agency agreements before January 2020 at the earlier.”
Hutchinson said both approaches had merit.
AIA was taking the decision that it was fairly clear what the upcoming requirements would be, and it might as well act now, while Fidelity Life was waiting until they were all completely signed off before moving.
He said advisers should expect that all insurers would eventually follow AIA’s lead.
“The Chatswood team has done a gap analysis between several current sets of agency terms and what would be required to meet the FMA's current guide to conduct. Changes to most sets of terms will be required at some point,”
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