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Insurance brokers earning 50% commissions

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Insurance Business | 19 Nov 2012, 12:03 AM Agree 0
The New Zealand media and Insurance Council has taken aim at the “mystery” commission levels of the country’s insurance brokers and cited examples of the sky-high commissions some brokers earn…
  • Andrew | 19 Nov 2012, 12:20 PM Agree 0
    Contain commissions at the insurers end - rather than putting it forward to the client. If clients see what is earnt at 20% on a $30,000 policy - they will argue (wrongly) every which-way that we do not do enough to justify that earn. 100% disclosure is only going to drive more of the lower-end SME market into the arms of direct insurance offerings.
  • Chris Griggs | 19 Nov 2012, 12:34 PM Agree 0
    Revealing Commissions earnt would be fine if every business in Australia had to reveal how much profit they make from every client, this includes all Spermarkets & Electrical & Furniture Stores, can't see that happening either.
  • David Coe | 19 Nov 2012, 12:59 PM Agree 0
    I agree, when I go to the fuel station to buy fuel, or buy an power tool from Mitre 10, I don't ask the owner for a breakdown of what he is getting paid from my purchase. Many years ago, I had a young lady work for me who use to work at Supre Clothing shop. She told me that some clothing articles were purhased for $5 and $10.00 wholesale by Supre and then sold retail for $50.00 & $60.00. I think a very large can of worms would be opened if every retailer in the country was to show what they are making on certain products.
  • Gary Heinemann | 19 Nov 2012, 02:14 PM Agree 0
    I am a Broker of only 3 years, a GI Agent for 17 and a Life Risk adviser for 23 years. In the Life field we have had to declare commissions for close on 20 years. I and many others have reported that clients don't give a damn what our commissions are. They will and do, judge us on our work. The declaration is irrelvant anyway - how does a client know how many cases we do in a week or a month and what work went into it?
    In the GI world, same question. Also, how does a client know the relativity between the commission they are paying and the effort and expertise expended by the Broker.
    There is far to much of the attitude these days of people looking to blame somebody else for their inadequate personal and business deliberations. People need to re-start thinking for themselves and making their own judgements.
    In both fields, one of the issues has always been that the Authorities don't deal adequately with REAL fraud and dishonesty, preferring to nip around the heals of the little guy. Also, I believe Insurer's, Life & GI, have been backward in this regard, often not taking action when they should to drive the message home.
    It's tough gig at the moment but only because our scoiety at all levels is on a short term thinking binge, to the point where we've even trained our politicians that way.
  • Tim | 19 Nov 2012, 03:20 PM Agree 0
    I agree with Chris if every business had to not only show the commissions - they should have to show their expenses. In many instances money is lost when education, license fees, E&O , office, staff, time, etc. costs are added. It's ridiculous. The wash out rate is huge because people can't survive long enough to get profitable soon enough.
  • Kay Jackson | 20 Nov 2012, 06:26 PM Agree 0
    Most companies the commission is not on top of the Premium so if you bought the same Policy Direct through CGU for example it would cost the same price - The commission is part of the back office expenses a Broker now does for the insurer such as processing items on Sunrise, Processing claims on Underwriter systems - Saves them the cost of having their staff doing these tasks - Does the cafe I have lunch in need to disclose how much mark up they have on their product!! - If a client is interested and asks then it should be disclosed but we Brokers do a lot for our Commission and it is not just shopping around for the best deal, in this current day and age it includes the processing of policies too!
  • Luke Chrzanowski | 21 Nov 2012, 08:56 AM Agree 0
    Well said Kay. Unfortuntely the "general public" wouldn't make the connection and would simply assume it's more expensive through a broker if brokers get commission. I think it's sad that we have to disclose every dollar we earn, yet many other businesses don't have to.
  • Merianne Black MIS Insurance Brokers | 21 Nov 2012, 11:40 AM Agree 0
    I have had one client who questioned the commission I was receiving which was 20%. The clients mark up on his business was 50%. None of this is relevant unless the expenses of the business is disclosed as well. The world of small business is tough enough already without nit picking on one small section of it. The market will be the best barometer. There would be no brokers if the return was too low and there would be too many brokers if the return was too high either way let the marekt set the rate. I am inclined to think at the moment the commission is too low for the hours and effort required
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