Draft Determination that sets out when a person or long-term insurer would not be complying with the principle of Equivalence of Reward has been released for public comment (Board Notice 181 of 2017).
The principle of equivalence of reward seeks to ensure level playing fields between the remuneration of representatives and independent intermediaries.
The primary rationale is to ensure that, while recognising that the contractual relationship between an insurer and its representatives should allow for a degree of flexibility in remuneration arrangement, this should not result in representatives earning remuneration significantly more than the corresponding quantum of commission payable to an independent intermediary for rendering similar services.
The Draft indicates that the effective date will be 1 January 2018.