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Insurance Business | 04 Dec 2013, 08:10 AM Agree 0
Australia's insurers are standing together on commission policy following Vero's reduction of personal lines rates – but are they keeping commissions stable or planning to follow suit?
  • Peter Vickers | 04 Dec 2013, 10:00 AM Agree 0
    Insurance Broking is a very similar model to Travel Agents.
    I thought only the airlines were that dumb in harming their distribution network. The insurance companies are showing the same level of misunderstanding of their economics and sales processes.
    Most airlines in the world lose money because all they know how to do is compete on price.
    Well I suspect that insurance companies will go the same route, Broke.
    The banks are a lot smarter as they have maintained the profit margins for their intermediaries, the mortgage brokers. And this is a much harder market as their product, the dollar, can never be differentiated.
  • James | 04 Dec 2013, 10:21 AM Agree 0
    Totally agree with Peter, the underwriters better beware. What would stop someone the likes of Steadfast or Austbrokers setting up there own insurance companies ?
  • Rod Parsons | 04 Dec 2013, 11:26 AM Agree 0
    Perhaps insurers have got so hooked on getting cheaper and cheaper on the direct market, an obvious way to hide some of their direct market losses is to get insurance broker commissions to subsidise their direct market losses? It amazes when what we can offer, the same insurer is up to 40% cheaper on the direct market.
  • Jack | 04 Dec 2013, 03:56 PM Agree 0
    40% Cheaper when you go direct even though they have to pay staff. Brokers do all household business on line so we bear all the admin costs including salaries and policy issue & postage - So now they want to drop commissions to 15% (33% drop) ..... and this is at a time when our loss ratio's are below 50% - It's just greed (again) - I agree, cluster groups need to focus on just "ONE" domestic underwriter to write the TOTAL domestic portfolio for that cluster ... and then, watch how quick VERO would start sqeeling because they losing $200 Million in personal lines business. ..... Did I mention Vero (AAMI) quoted our client full comp on a $45k Holden Capitiva, rating one for life, agreed value, 2 year replacement - Premium $335..Really... Does that include all the panels? Crazy!
  • Scott | 04 Dec 2013, 04:46 PM Agree 0
    Mmm, one wonders if the internationals have been hit with this or just us local suckers!!
  • Mr Curious | 05 Dec 2013, 10:41 AM Agree 0
    I fail to see how adjusting the brokerage percentage will have any effect on the revenues that VERO receives. As Jack says the direct client is 40% cheaper at times so the brokers client obviously must want advice and/or someone to look after their insurance cover. That being the case I think brokers will move clients from VERO to QBE or CGU where they know they will be supported and not undermined for the work that they do.
  • MARTIN | 05 Dec 2013, 03:41 PM Agree 0
    Rod Parsons is quite right. To explain to any client (few luckily) that certain Insurers are so much cheaper on a "direct" basis is not only embarrassing to a Brokerage but also very time consuming in having to explain why. We all know that 90+ % of consumers never read their Policy Wordings (PDS'S).

  • Andre | 09 Dec 2013, 05:00 PM Agree 0
    Never bite the hand that feeds you.
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