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A little squeeze here and there

10 July 2006 Angelo Coppola

Everyone remembers the old days, right, when Liberty paid brokers to upload proposals...

Well, one reader wanted to know why with most life assurers trying to get intermediariesto load proposals themselves, perhaps it is timethat an admin fee can be paid to the broker for this procedure.

Previously the LOA stopped this occurring when only Liberty had this facility.

We asked the LOA for their thoughts on the matter.

Regarding the history of this issue, it is important to note that the FSB, as the regulator, intervened when Liberty Life paid brokers an admin fee for uploading proposals, because this practice was considered to be in breach of the Commission Regulations.

Since the commission regulations have not changed, it would therefore be impossible to introduce such an admin fee.

The debate of appropriate and sustainable remuneration of advisers is, however, an ongoing one and forms part of the LOA's submission to National Treasury on the Discussion Paper on Contractual Savings in the Life Insurance Industry.

Several new pieces of legislation - FAIS, the Collective Investment Schemes Act, FICA and the National Credit Act - have significantly increased the cost of compliance for both life companies as well as advisers. Yet there remains huge pressure on life companies to cut costs and to pass on the benefits to their clients.

And since this reality also impacts on brokers, we have seen the emergence of broker networks that aim to assist brokers with the increased admin burden of compliance.

Changing to an electronic system of uploading application forms was also aimed at reducing the admin burden of having to complete and submit forms manually and to thereby save costs for all concerned.

Editor's thoughts:
* The life companies - it appears then - are passing on their savings to the consumer while squeezing the broker?

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We have watched with interest as each of the country’s large life insurers report their 2021 life claims statistics, with soaring claims and claims values. That got us thinking: how do the big life insurers compare against one another, from an IFA perspective?

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