November 12, 2018

November 12, 2018 | Risk Pulse

New 2019 Commission Rates Transition - What You Need to Know

  • Zurich implementation of LIF remuneration rules from 1 January 2019
  • No change to level commission rates.
  • All commission rates below are inclusive of GST. 

Since 1 January 2018, transitional arrangements have been in force that limit the amount of upfront commission paid for the sale of life insurance. An 88% cap of the first year’s premium was the first stage in broader reforms which were passed through parliament as part of the Life Insurance Remuneration Act in 2017.

Changes to commission rates also extended to trailing commission with a maximum of 22% applicable in all subsequent years where an upfront hybrid-style commission model had been used, along with the arrangement whereby a 60% ‘clawback’ of the initial premium applies in the event of a policy lapse in the second year and 100% within the first 12 months.

The second phase commences from 1 January 2019, and will see a further reduction in the upfront commission payable from 88% to 77%. The third and final tranche will set commission caps at 66% of the premium in the first year from 1 January 2020.

It should be noted there  are no grandfathering arrangements for post-LIF policies from January 1 2019 and any increases or additions of cover  to policies which began on or after 1st January 2018 will be paid on the new hybrid commission rates of 77% - initial  and 22% - renewal.

Grandfathering continues to apply to additions/changes to pre-LIF policies where pre LIF commission rates apply.

No flexibility is permitted to these dates. Applications which are submitted in 2018 quoting 88% initial commission will be issued with 77% initial commission if the policy is not inforce by 31st December 2018.

The variations in remuneration impacted a large number of advisers with an overwhelming majority (82%) having adopted an upfront commission model1. An adviser who previously elected this method of remuneration would have seen a sizeable reduction in initial income. Under the revised LIF commission schemes, policies that remain in force over time can be financially beneficial compared with the previous upfront rate2.

Zurich has a range of tools and resources designed to help you adapt to the LIF reforms. Ask your Zurich risk specialist BDM for details on 1800 252 650 or visit


1Australian Securities and Investments Commission (ASIC), Review of retail life insurance advice, Report 413, 9 October 2014, pp. 26–27.

2Based on an 80% initial and 20% ongoing versus a 110% initial and 10% ongoing. Assumes no change in the underlying premium.

November 12, 2018

Helping advisers deliver better outcomes whilst avoiding the distractions

Welcome to the latest edition of Risk Pulse. As we close in on the end of a year that can only be described as tumultuous, it’s worth pausing for a moment and reflecting on some of the learnings from our latest AFA Award Winners. This year’s finalists once again proved to be very impressive and whilst a diverse group in terms of style and offering, they all shared a very strong sense of focus. Every year our industry seems subject to ever increasing change, and every year we see the leading advisers are those who have no fear of legislative change (nor any other change for that matter) because they are supremely confident of their ability to adapt.

November 12, 2018

The Cost of Care Part 1 of 3 – The Cost of Cancer

In analysing common methodologies used across the life insurance advice sector, we were able to identify a missing link that could help advice be more tailored and personalised. The Cost of Care whitepaper is an industry first, bringing together detailed research across the broad spectrum of injury and disease. Across three articles, we will delve into three of the biggest cost burdens facing Australians today – Cancer, Heart and Artery and Mental Health.

November 12, 2018

Agile protection for a flexible workforce is becoming a reality for employers

The business case for an agile social protection system fit for a 21st century labor market.