Remuneration – How do we get paid?

March 30, 2020

Our Remuneration / How we get paid.

We, quote4it.ie Ltd. t/a MedProtect, act as intermediary (Broker) between you, the consumer, and the product provider with whom we place your business.

Summary

We receive a financial commission from life assurance companies when we place your business with them.  The amount of commission that we receive is a percentage of the premium that you pay, so the larger the premium, the higher the financial payment that we receive.  We receive a considerably higher % in the first year (initial commission) than we do in any subsequent years (renewal commission) of your policy remaining in force.  We may, or may not, receive this first year’s amount in full at the start of your policy (known as indemnity commission).  This is a choice that we make on an individual policy basis.

We hold agency agreements with the following life assurance companies in Ireland;

Aviva Life & Pensions / Irish Life / New Ireland / Royal London / Standard Life / Zurich

We only arrange 3 forms of protection insurance policies;

  • Income protection.  We would usually place this type of business with Aviva Life & Pensions because of the quality and price of the product.  They have a great claims payment history, particularly following their acquisition of Friends First in 2019.  We would usually take 100% of the first year’s premium in the form of indemnity commission and 15% of the premium every year thereafter for as long as your policy remains active.
  • Life assurance. We would usually place this type of business with Royal London because of the price of their policies, their engaging underwriting considerations and their quality service –  prior to setting up the policy, during the policy lifetime and when claiming.  We would usually take 100% of the first year’s premium in the form of indemnity commission and 10% renewal commission thereafter for as long as your policy remains active.  Royal London also offer us the option of taking an additional 25% commission OR to reduce your premium by either 12.50% or 15%, depending on which product you are taking.  9 times out of 10, we will pass the reduction in premium on to the client instead of taking the additional commission.
  • Specified Serious Illness Cover.  We do not arrange much of this type of insurance, but when we do, we place this type of policy with whichever company has the most comprehensive cover on offer at the time of applying.  So far, this has been either Royal London or Zurich.  Commission payments for this policy type are the same as for life assurance – see above.

The Background

Pursuant to provision 4.58A of  the Central Bank of Ireland’s September 2019 Addendum to the Consumer Protection Code, all intermediaries, must make available in their public offices, or on their website if they have one, a summary of the details of all arrangements for any fee, commission, other reward or remuneration provided to the intermediary which it has agreed with its product producers. 

What is Remuneration?

Remuneration is the payment earned by the intermediary for work undertaken on behalf of both the provider and the consumer.   The amount of remuneration is generally directly related to the value of the products sold.

What is Commission?

Commission is payment that may be earned by an intermediary for work undertaken for both provider and consumer.

There are different types of remuneration and different commission models:

Single commission model: where payment is made to the intermediary shortly after the sale is completed and is based on a percentage of the premium paid/amount invested/amount borrowed.

Trail/Renewal commission model:  Further payments at intervals are paid throughout the life span of the product.

Indemnity Commission

Indemnity commission is the term used to describe a commission payment made before the commission is deemed to be ‘earned’. Indemnity commission may be subject to a clawback (see below) if the consumer lapses or cancels the product before the commission is deemed to be earned.

Other forms of indemnity commission are advances of commission for future sales granted to intermediaries in order to assist with set up costs or business development.

Life Assurance/Investments/Pension Products

quote4it.ie Ltd. t/a Med Protect do not currently offer advice on any pension or investment products and as such, we do not receive any commission for these policy types from any product provider.  We provide advice on protection products only.

For Life Assurance products commission is divided into initial commission and renewal commission (related to premium), fund based or trail (relating to accumulated fund).

Trail commission, bullet commission, fund based, flat commission or renewal commission are all terms used for ongoing payments. Where an investment fund is being built up though an insurance-based investment product or a pension product, the increments may be based on a percentage of the value of the fund or the annual premium. For a single premium/lump sum product, the increment is generally based on the value of the fund.

Life Assurance products fall into either individual or group protection policies and Investment/Pension products would be either single or regular contribution policies.  Examples of products include Life Protection, Regular Premium Life Assurance Investments, Single Premium (lump sum) Insurance-based Investments, and Single Premium Pensions.

Investments

Investment firms, which fall within the scope of the European Communities (Markets in Financial Instruments) Regulations 2007 (the MiFID Regulations), offer both standard commission and commission models involving initial and trail commission. Increments may be based on a percentage of the investment management fees, or on the value of the fund.

Clawback

Clawback is an obligation on the intermediary to repay unearned commission. Commission can be paid directly after a contract is concluded but is not deemed to be ‘earned’ until after a specified period of time. If the consumer cancels or withdraws from the financial product within the specified time, the intermediary must return commission to the product producer.

Fees

The firm may also be remunerated by fee by the product producer such as policy fee, admin fee, or in the case of investment firms, advisory fees.  We do not currently have any arrangements of this sort in place with any product provider (insurance company).

Preferred Provider Rate

We do not currently have any arrangements of this sort in place with any product provider (insurance company).

Other Fees, Administrative Costs/ Non-Monetary Benefits

The firm may also be in receipt of other fees, administrative costs, or non-monetary benefits such as:

  • Attendance at product provider seminars
  • Assistance with Advertising/Branding

This is not currently the case for Med Protect. We primarily attend the life assurance companies’ online webinars to keep us abreast of any relevant changes in the industry to ensure we remain sufficiently advised to provide you with the best advice.  We do not pay to attend these webinars.  We do occasionally attend physical industry related seminars which are usually held in hotels and we do not pay to attend these events.  We do not receive any other form of financial assistance from any life assurance companies.