Partners’ fall in medical business ‘lower than anticipated’

Managing director Naomi Ballantyne said there had been approximately 10% fewer applications since the September 1 commission changes came into effect, when upfront commission was replaced with commission paid on an ‘as earned’ basis, where advisers get paid as each premium is paid to the insurer.

Ballantyne said Partners Life was forced into changing the commission structure as they ended up writing far more medical insurance than estimated, and the relative lack of reinsurance financing for medical cover meant commission payments were coming out of capital.

“When we launched we thought we’d do about $2-$3 million of medical premium in the first year and instead we did more like $12 million, which meant we just had to keep raising capital in order to pay medical commissions, which just seemed crazy.”

She said there was some concern that the change would also see a knock-on effect on other benefits written alongside medical cover, as brokers moved to providers paying upfront medical commission, though this failed to materialise.