[Weekly Wrap] Commission is this week's buzzword
I spoke to Naomi Ballantyne, of Partners Life, yesterday. She said the rate of medical insurance business the company was doing had slowed markedly when it shifted away from upfront commissions to as-earned. Partners had been having to pay upfront commissions out of its capital, which wasn't sustainable.
Because the medical business had slowed, the company's headcount dropped by eight. The number of jobs lost was actually more than that, because some senior underwriters were replaced by juniors, which helped to keep staff numbers up.
But on the very same homepage that links to the story about Partners' restructure, we have an argument being waged that commission doesn't drive insurance advisers' decisions.
Nigel Tate has responded to Martin Hawes' opinion piece, in which he said that customers perceived a level of self-interest in any person who was paid by commissions. He said advisers would not be trusted until they moved away from commission-based remuneration. Tate, president of the IFA, told me that he can understand both sides of this argument, and his organisation doesn't have a preference for commission or fees.
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