Life firms look at lapse deals
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Life offices are considering offering better commission terms for advisers that submit business with lower lapse rates, according to RGA UK.
The reinsurer says that although there are cases where it is appropriate to rebroke, it is of benefit to both providers and advisers to achieve high persistency rates. RGA UK says low lapse rates mean that reinsurers see their income streams maintained, life companies are better able to cover high upfront costs and advisers avoid having their commission clawed back.
Business development manager Mick James says advisers with high retention rates have clients who fully understand the product they have bought.
He says: “I know some life offices are already starting to look at this and have conversations about whether intermediaries with strong retention rates are worth something to the business compared with intermediaries with very high lapse rates.”
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