The Association of Medical Insurers and Intermediaries (AMII) executive chairman David Middleton has warned commissions on private medical insurance cover are likely to be abolished in future.
The issue of signifcantly higher commission payments when new policies are taken out compared to at renewal was also raised as a problem for the industry in relation to the incoming Consumer Duty.
Middleton (pictured left) was speaking on the second morning of Health & Protection’s Health Summit at Tylney Hall in Hampshire today.
“I actually think when we talk about fair value, how can you justify some of the commissions that get paid, particularly on international PMI?” Middleton said.
“So I do believe that at some stage in the future commissions will be abolished, and we all need to get ready for that because fees are more transparent.”
Fellow speaker and compliance consultant Branko Bjelobaba (pictured right) added there was no indication such a change was coming.
But he warned that skewed remuneration on new policies which could potentially drive advisers to unnecessarily switch business was a concern.
“The fair value assessment includes the insurer looking at what they’re paying for the distribution and assessing that as a commensurate amount of money for the work that you’re doing, which I think in PMI I always find it difficult to understand,” he said.
“There is a big amount of commission at new business and at renewal it drops a lot and yet you’re doing the same amount of work.
”I don’t know how insurers are explaining that in terms of fair value assessments saying it’s fine with new business and it’s fine at renewal.”