News Article : Life Assurance Costs
|Category:|| Advisers & Brokers : Commission & Fees|
|Posted:||09 Sep 2005|
“Life offices are using the broker commission issue as a smoke screen to divert attention away from their own costs”, says Johann van Rensburg, president of the Insurance Brokers Council (IBC) which represents some 4000 members.
He cites a case reported in the media about a CA de Sousa who had contributed R38 000 towards a retirement annuity. However, when the policy was made paid up, the life office quoted a policy value of a mere R6 000.
When de Sousa queried this, the life office explained that expenses were recouped from the policy value and claimed broker’s commission as the reason for the high expenses.
“What the life office had neglected to mention,” says Mr van Rensburg, “was that it had already recovered commission amounting to R28 000 from the broker concerned when the retirement annuity was made fully paid up.
“This fact only came to light when De Sousa involved the pension fund adjudicator who, after investigating the matter, ordered the life office to pay up.
Mr Van Rensburg does not believe this is an isolated case. “What life offices do not tell you is that despite pressure from the brokers, almost all life offices retain the commissions recovered from the broker. They do not pass it on to the policyholder in the form of enhanced policy values.”