Legal and regulatory review for the life and health insurance sector
Legal and regulatory update for the life and health insurance sector

Fidelity Life set to halt upfront commission on CPI increases, and more daily news

Fidelity Life has announced that it will no longer offer advisers upfront commission on premium increases resulting from inflation rates. Fidelity Life is currently the only insurer offering this type of upfront commission. Acting CEO Adrian Riminton said that this change will be implemented in six months.

“"We've concluded that paying initial commission on CPI increases is out of step with changing expectations around good customers outcomes and we're the only insurer that pays it."

The change would take effect in six months' time.

If a clients' premiums were $1,000 and increased to $1,030 because of inflation, most insurers would pay renewal commission on the total new amount.”

Adrian Riminton continued by acknowledging that this change may cause issues for some advisers but said that the early notice is intended to allow for adjustments. Riminton announced that Fidelity Life will stop be paying upfront commission on CPI increases on former Tower policies that weren’t eligible for payment from next month. Fidelity Life  is set to announce more changes in the near future.

“"We acknowledge this change may have a financial impact on some advisers. That's why we are providing six months' notice to allow you as much time to adjust as possible."

Riminton said the insurer had also found that, since 2015, it had been paying initial commission on CPI increases for some former Tower policies that were not eligible for the payment.

"While we won't be looking to recoup this, we do need to correct our mistake. So from November 2020, we'll no longer pay you initial commission on CPI increases on these policies."

He said Fidelity Life would reveal more changes to its adviser proposition in the coming months.” Click here to read more

In other news

FMA KiwiSaver report: Contributions, fund-switching and fees

RBNZ: Reserve Bank relaunches Insurance Act review

nib: top five claims in August:


Amount

Details

 

1

$98,810

Spine Surgery

2

$78,780

Coronary Bypass Surgery

3

$77,530

Spine Surgery

4

$72,860

Aortic Valve Replacement

5

$72,850

Coronary Bypass Surgery

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