Priority Protection
Priority Protection provides a selection of cover options to cater for a broad range of insurance needs.
{{title}}
{{label}}24 October 2019
On 1 January 2020, the final phase of Life Insurance Framework (LIF) remuneration rules will be implemented across the industry.
Watch out for our updates in upcoming months. As we approach 1 January 2020, we will be communicating updates, outlining LIF rules and how they relate to your experience with AIA Australia and Priority Protection and Priority Protection for Platform Investors.
Your relationship with us is extremely important and with this in mind, I want to remind you again about the potential impact to your commission on the current business you have with us for completion.
With the final phase of LIF, there is no transition and hence grace period to the commission rate of 66% from 1 January 2020 and if any business fails to complete (issue) before this date it will be subject to the new commission structure.
The maximum allowable commission in relation to LIF policies (i.e. those which were not eligible for grandfathering prior to 2018) will be adjusted in line with the final phase of the LIF rules.
Commission is payable on the total annual premium excluding any policy fees, premium frequency charges, Government stamp duty and the AIA Vitality Contribution Fee (if applicable).
The above commission rates apply to new policies issued from 1 January 2020 as well as alterations made to any LIF policies on which AIA Australia pays new business commission.
As was the case with the second implementation phase, the LIF regulations DO NOT allow for a grace period in which applications submitted but not issued in 2019 can upon issue, be paid commission at the 2019 maximum upfront commission rate of 77%.
As always, AIAs underwriting and administrative teams are working extremely hard to achieve a quick completion process. To maximise the opportunity for your client’s policy applications to be issued/completed by 31 December, please ensure you allow adequate time for this process if you wish for a policy to be issued prior to the end of 2019.
NOTE: Any policies issued in 2020 will be subject to the new 2020 commission maximums.
Remuneration paid under the level commission structure has not been impacted by the LIF changes:
The two year clawback period for all policies not grandfathered prior to LIF and for which upfront commission is selected still applies. This clawback period applies from the date the policy is issued. However, where cover under a policy is backdated as a result of a client or adviser request, the clawback period will not apply from the backdated date. It will apply from the date on which AIA Australia made the decision to issue the policy.
Any commission paid on additions to a policy after the two year clawback period has ended will be subject to a 12 month clawback period.
Following on from the 1 January 2018 LIF changes, if a policy is cancelled and replaced, a brand new policy will be issued and will therefore be subject to the LIF regulations. Any commission payable (including any advanced payment of renewal commission in year one) will be paid subject to the new LIF rules, including the two year clawback period.
Should you need further assistance or discussions relating to this matter, please contact your State Office or AIAA CDM.