The alliance is arguing that the move towards a fee-only model - essentially a fixed fee for advisory services - would endanger the livelihood of the financial advisers.
It is also refuting an assertion by Monetary Authority of Singapore (MAS) Managing Director Ravi Menon that the commissions can amount to 160 per cent of the annual premium of a product.
The review panel's proposals, if adopted, would see the industry undergo the most wide-ranging shake-up in more than a decade.
And five months after Mr Menon dropped the bombshell that it is looking at lowering the costs of insurance products by way of scrapping the commission-based model and the multi-tier distribution structure, a task force from the alliance argued against the proposed changes at a one-hour meeting with the Financial Advisory Industry Review (FAIR) panel last Tuesday.
The following day, the task force's chairman, Mr Leong Sow Hoe, sent a memo to the alliance's members updating them on the meeting, which he wrote that he left "feeling optimistic".
The alliance includes the Insurance and Financial Practitioners Association of Singapore and insurance firms, among others.
According to the memo, which TODAY has obtained, it argued forcefully against the move towards a fee-only model because it would "not only break our rice bowl, but would not achieve the national objective of increasing coverage and penetration".
Mr Menon had said the "overriding aim" of FAIR is to "protect and benefit the consumer", citing how the commissions are pushing up the cost of the products.
The commission-based model also risks conflicts of interest between adviser and client because advisers may try to sell mainly policies that command higher commission, he added.
But the task force refuted these, saying its research showed that the "norm" was closer to 120 per cent of annual premiums and that "bread-and-butter policies form the bulk".
Doing away with a multi-tier distribution structure - the agent gets commission, his boss gets a cut and the latter's manager gets another cut - would also "(compromise) quality of supervision", it argued.
Citing statistics on the income of financial agents and managers which were purportedly "below the national norm", as well as "unadorned" with CPF contributions or medical benefits, Mr Leong wrote: "Any cut in commissions would render some or even most of us out of a job."
Mr Leong pointed out that the United Kingdom and Australia, which have a fee-based model, have seen an "industry exodus, with the remaining mainly elderly agents serving the well-off".
Mr Leong also wrote that consumers it surveyed do not want a fee-based system as well. Rather, they want "personal interaction with advisers, who stay on for the long-term to service them through the different stages of their life, and to settle the claims they have to make in times of distress", he said.
Yesterday, Mr Leong told TODAY the task force's presentation was "quite well-received, going by my own gut feel", by the FAIR panel chaired by MAS Assistant Managing Director for Capital Markets Lee Chuan Teck.
He added that Mr Lee remarked that it gave the panel a better comprehension of issues from the perspectives of practitioners and that the research and surveys would help them in their deliberations.
When contacted, an MAS spokesperson said the FAIR panel has been engaging many stakeholders and discussions are ongoing.
"We continue to welcome views and suggestions on how we can achieve the objectives of raising the professionalism of the industry and representatives, as well as enhancing the efficiency of distribution of financial products," she added.
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