Independent Financial Adviser Gee & Co has called for health insurance intermediaries to abandon commission and charge fees, while announcing plans to make a “a major drive” into the healthcare market.
The fee-based IFA said the only way to ensure intermediaries act on behalf of customers is to remove transaction payment from the insurer and replace it with a payment from the customer.
It also claimed that the recent addition of a 12.2 per cent National Insurance (NI) charge to corporate private medical insurance (PMI) is a major reason to “opt for fees”. As the commission element within a PMI corporate policy represents about 10 per cent of the premium, an employer now has to pay NI on that commission.
Gee & Co gave the example of a company scheme with 20 members, where the annual premium is £20,000 a year including Insurance Premium Tax (IPT).
A reduction in the premium by a 10 per cent commission element would reduce the company’s premium to £18,000. Not only has it saved on the commission, but also on the five per cent IPT on that part of the premium.
However, PMI intermediary Stephen Walker, from Brighton-based Medical Insurance Services, who works on a commission basis, branded the comments as “ridiculous” and said it was offensive to suggest that intermediaries are always looking to take the most lucrative deal.
He said: “I would worry about service standards slipping under a fee system. If someone charges £100 for advice, someone else will undercut that and charge £90, and I don’t think, in the long run, that this will mean people get the best advice.”