Fidelity Life chairman Brian Blake noted that the Government missed an opportunity to reduce life insurance policy commissions through CoFI. In a market that is highly competitive, Blake says that a voluntary reduction in upfront commission is unlikely, although Blake said that Fidelity Life is confident that it has adopted changes that meet guidelines. Fidelity Life is set to launch an online adviser product accreditation programme and an adviser quality assurance programme. Similarly, it has developed good customer outcomes principles to ensure compliance.
“Fidelity Life chairman Brian Blake says the government has missed an opportunity to force down commissions on life insurance policies.
Blake says: "The failure to address high upfront commissions in the Financial Markets (Conduct of Institutions) Amendment Bill was a missed opportunity in our view.
"In a highly competitive market like ours, without regulatory intervention it’s unlikely anyone will significantly reduce upfront commission levels and risk losing market share," he says in the company's annual report
He says Fidelity Life is confident it has adopted conduct and culture changes which meet the requirements of the Financial Markets Authority/Reserve Bank of New Zealand conduct and culture review.
The company will shortly be introducing an online adviser product accreditation programme, an adviser quality assurance programme and it has also developed good customer outcomes principles to help ensure Fidelity continues to meet the needs of its customers.
Further enhancements to its adviser proposition will be announced from early 2021, including some digital initiatives resulting from its Project Watson IT development.”
Although total comprehensive income and commission payments decreased, Fidelity Life experienced premium revenue increased. Fidelity Life has noted that it is looking to comply with RBNZ’s guidelines on prioritising capital protection. To comply, Fidelity Life would not be paying dividends this year.
“In the year to June 30, total comprehensive income fell from $20.7 million to $17.9 million. However, profit rose from $11.6 million to $17.0 million.
Insurance premium revenue increased from $275.47 million to $269.49 million and claims paid out rose from $125.7 million to $139.7 million.
However, commission payments fell from $57.37 million to $53.42 million.
The company’s earnings per share increased just over 10% from $8.73 to $9.62.
Fidelity says because the Reserve Bank has clearly advised all insurers that protecting capital should take priority over paying dividends, no dividend would be paid this year.
The Reserve Bank "expects insurers to take steps to protect, if not build, their capital positions to ensure the industry remains in a strong position to support New Zealanders through Covid-19 and this time of economic uncertainty."” Click here to read more
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