Commissions not the main problem: CommInsure

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30 August 2010

Governments need to understand commissions are more than just a payment, says CommInsure GM Retail Advice Tim Browne.

“To look deeper into commissions, the [Federal] Government has to understand there are two issues that need to be looked at,” he told insuranceNEWS.com.au. “They are the factual evidence of underinsurance in the life industry and the implications that has for the Australian economy and socially.”

Mr Browne says the life insurance industry probably hasn’t done a good job communicating these implications to both government and consumers.

“Life insurance is a complex business and the question is, would people be happy paying the associated administration costs and the insurance costs,” he said. “I don’t think people would.”

He says the amount of time taken to write an average life policy is usually measured in weeks rather than hours.

This has become evident with a new team created at CommInsure to look at suspended insurance proposals.

“We have created a team to deal with these applications and help clients through the process,” Mr Browne said. “Some applications have been running for months.”

He accepts commissions are not suitable for all clients and a fee is applicable in some cases, but for the majority of clients an up-front payment is the best solution.

“I think we have to look at whatever it takes to tackle the underinsurance problem and if commissions help achieve this, then keep the option.”