Legal & General has become the latest insurer to offer IFAs who trade online enhanced commission. It...
Legal & General has become the latest insurer to offer IFAs who trade online enhanced commission. It launched its own online term service, with online underwriting earlier this month.
The company will be offering IFAs an additional 10% commission and follows Friends Provident's announcement last month that it will offer an additional 5% to online IFAs.
Norwich Union has offered an additional 10% to online IFAs for some time.
Stephen Wynne-Jones, product marketing manager at The Exchange, said: "More term players are now looking at e-products with enhanced commission. It is cheaper for life offices to trade online and this is better for IFAs as they can access information quicker."
He added that Norwich Union, Friends Provident and Legal & General were among the most used insurers on The Exchange.
Wynne-Jones said this should, in turn, have an impact on product pricing. "It would take a brave office to not pass on these savings," he said.
"This could prompt a new price war. If an office is only trading online, like Friends Provident, it will make huge savings and this will help it bring down rates even more," he added.
But Mike Turner, product manager at Friends Provident, said that while more providers may follow this trend in order to compete, he did not think that the market will become commission led.
"There is a limit with what you can do on commission for term. The decision will always be based on premium and if you are not in the top handful you will not get the business," he said.
However, Legal & General's decision to offer enhanced commission was made in an attempt to encourage IFAs to use the service.
Diane Buckley, IFA e-commerce development director, said: "We want to encourage IFAs to change their habits and trade online. At the moment the vast majority of IFAs are reliant on paper so we need this impetus to make it work." She added: "This level of commission will not be sustainable going forward."
BUPA is expected to offer enhanced commission to IFAs selling PMI online in the near future.
