Australian Unity advisers will work under a new remuneration regime from Wednesday, offering life insurance policies using only hybrid or level commissions.

Personal Financial Services CEO Steve Davis says advisers made a unanimous decision to switch at the dealer group’s adviser forum and recent professional development days.

More than 70% of Australian Unity advisers are already remunerated via hybrid or level commissions, Mr Davis told insuranceNEWS.com.au.

“Upfront commissions will be ditched completely from July 1, except where a statement of advice has already been provided before July 1, because it would be inappropriate to have to go back and re-do advice documents,” he said.

“For now, it is difficult to confirm the actual commission rate, because each insurance company has slightly different hybrid rates and arrangements.”

The hybrid commission structure carries “lower economic risk” than alternatives proposed in the recent Trowbridge report on the life industry.

Mr Davis says there has been little discussion about whether the Trowbridge report’s proposals will benefit consumers through lower premiums.

“Secondly, if the Trowbridge recommendations are implemented, will that lead to a potential reduction in insurance advice provided to Australians?” he said. “If it does, the flow-on economic consequences of underinsurance could have tragic consequences at an individual family level and could create significant economic costs to the community.

“This is one of the other reasons we believe utilising a hybrid commission model is lower economic risk than the proposals within Trowbridge.”

The Trowbridge report makes 11 recommendations, including slashing adviser commissions to the point that they sell life policies at a loss.

Hybrid commissions are seen as key to sustaining the life industry, which is struggling with high churn rates amid large upfront commissions.

Association of Financial Advisers President Deborah Kent has said the group is “encouraging advisers and licensees to endorse hybrid and level-commission remuneration and remove high upfront commissions”.