Rivkin War On Life Agents
Sun Herald
Saturday May 11, 1996
IN a revolutionary move that will mean one-off savings of up to $450 or 40 per cent for new policy holders, Rene Rivkin has extended his no frills stockbroking service into insurance.
It will mean his company, Rivkin Croll Smith, will abolish agents' commissions on insurance policies, instead imposing a much lower one-off fee.
On a life insurance policy costing $1,500 a year, it will mean a saving in the first year of $451 and, until May 31, $701.
To be profitable, Rivkin Croll Smith will need a high volume turnover, which would almost certainly sound the death knell for many of the 4,500 insurance agents who sell life policies for major companies such as AMP and National Mutual.
"Our agencies will represent several leading insurance companies, offering policy holders huge discounts for the first time in Australia," said Mr Rivkin, whose chain of gold worry beads and well-heeled clients including Kerry Packer, as well as his own company forays, have made him a prominent stockbroker.
Describing it as a "no frills non-advisory service", Mr Rivkin added "this has never been done here before but I suppose in one sense it is not revolutionary. We're in discount stockbroking, so why not that?"
Mr Rivkin said he was looking at other financial products but not non-personal insurance.
It is understood Mercantile Mutual and Tyndall have already signed with Rivkin Croll Smith.
Other insurers are also expected to join but AMP is believed to be waiting and seeing.
The policies will cover term life insurance, income protection, disability and trauma and will be sold from Rivkin Croll Smith's Sydney, Melbourne and Gold Coast offices as well as through accountants and solicitors who will receive a $100 referral fee.
The fee schedule has been designed so that the higher the premium, the bigger the discount. This means that the higher the risk you are, and so the higher your premium, the bigger the discount. You would still pay more than somebody with less perceived risk.
The cost of income protection insurance - which is paid if you are sick or in an accident - depends on the amount you are insured for, your age, health, sex, earnings and whether you smoke.
Key person policies, in which companies insure top executives, would mean huge savings to business.
Although technically the agent's commission is rebated, at no point is it actually paid. In practice, customers would pay a fee between $99 for premiums up to $600 and $299 for premiums over $1,200.
The move follows the success of Mr Rivkin's no frills stockbroking service which charges $99 for a transaction up to $100,000, a discount of up to $401.
"This business is growing exponentially, well beyond my wildest dreams," Mr Rivkin said. "I always thought that I was a classy broker charging higher fees. Now I'm making more money not giving advice." Predicting a large market for discounted insurance, Mr Rivkin said "we have multi-millionaires walking in off the street, well-known people who are coming in because it is just so dramatically cheaper."
The insurance operation will be headed by former solicitor Terry McCowan, who approached Mr Rivkin last year seeing an opportunity in the fact that insurance companies charge all their commission in the first year. Without the need to provide advice or financial analysis, this also meant costs could be slashed.
"Our customers will be those who know they need insurance, have bought it before, want to save money and have become disillusioned with the sales approach of some advisers," Mr Rivkin said.
© 1996 Sun Herald
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