Insurer is first to make public, commission paid to IFAs on its corporate schemes By Rachel Williams...
Insurer is first to make public, commission paid to IFAs on its corporate schemes
By Rachel Williams
BUPA has become the first of the large PMI providers to disclose the commission that it pays to IFAs on corporate PMI schemes.
The health insurance giant will also be offering a 'net' price contract in the large corporate market which will allow the intermediary and the client to agree to a suitable level of commission.
Steven Flanagan, director of sales at BUPA, said: "We have developed this new programme in consultation with clients, brokers, IFAs, and their representative bodies. We believe it is the best way forward for the PMI market in the UK. Today providers or brokers of insurance business must increasingly work within a transparent business environment."
Stephen Clements, senior health consultant at William M Mercer, said that many employers purchasing PMI would not be aware of the loadings made to premiums to cover intermediary commission, and that disclosing this will give clients a greater understanding of what they are paying for. "Disclosure of commission will help break down the total cost into different elements. This will enable the corporate purchaser to focus on the value for money of each individual element."
He adds: "As the employer becomes better at unbundling the package there will be less focus on price and more on value. Employers will now be better placed to appraise the quality, efficiency and the effectiveness of the benefits and services being provided."
Clements said this may mean some insurers would have to place more focus on service and value for money, which are frequently the most important aspects of the policy for the employer. As employers will be aware of the commission paid to the intermediary, IFAs may need to improve their service so the employer believes that commission is well earned.
The intermediary will no longer simply be a placing agent said Clements, who added: "The IFA will have to demonstrate how they can add value to the process as their remuneration will become much more explicit."
Clements believes that other insurers will watch how the move by BUPA is accepted before they follow. PPP declined to comment on its intentions and Norwich Union Healthcare said that it does not disclose fees and does not anticipate that this will change.
"Norwich Union does not think it is appropriate to disclose details of what is negotiated with different companies," said Louise Zucchi, press officer at Norwich Union.
However, firms including Clinicare and Prime Health said they have always been open about fees to IFAs on group schemes.
