Commissions: Insurers may poach personal portfolios, say brokers

Commissions: Insurers may poach personal portfolios, say brokers

Commissions: Insurers may poach personal portfolios, say brokers Brokers remain optimistic that insurers are not gauging reaction from Vero’s decision to cut commissions before making similar moves – rather some expect insurers to make a play for their business with better deals.

Insurers yesterday remained resolute that they would not cut broker commissions following on from Vero’s decision to reduce rates on home insurance.

Brokers are hopeful that the insurers will stick to their guns. Robert Cooper, director of Cooper Professional Risks, said: “I don’t think other insurers will follow suit because we will see a lot of broker portfolios moving away from Vero.

“Brokers have to act in the best interest of clients and if an insurer still offers the best price and best cover for the client [regardless of commissions] then the client should stay with that insurer. What will probably occur is if the broker can get the client the same cover at the same price with another insurer they will take it – and they will still be acting in the best interests of the client.

“The competitors will see it as an opportunity to pick up business – it encourages them to make a special offer to brokers looking for like for like cover.”

Broker champion Kate Fairley said she is unsure if brokers will switch to other providers based on commissions.
ASIC will have to watch out for brokers being preferential because brokers can’t chose products based on remuneration.”

Some brokers believe intermediaries may have to make a stand against the lowering of commissions.

Murray Bruce, MD of Bruce Insurance, noted that brokers do not want to exit the personal lines market completely and would have to come together to “make a stand”.

“There will be a couple of insurers that support brokers. Brokers should stick together, cluster groups like Steadfast can help with that,” he added.

However, David Coe, owner and manager of Northwest Insurance, voiced concerns that some insurers would eventually reduce commissions on personal lines.

“We know there is a big push from some insurers who also play around in the direct market and offer lesser priced domestic products have either minimal or no outlay in commission saving their bottom line […]. Let’s hope the insurers do not [lower commissions].”
 
 
 
 
5 Comments
  • Jack 5/12/2013 10:31:35 AM
    I don't think ASIC would have to worry too much about Brokers moving because of higher commissions - Most of the Cluster Group policies are the SAME wordings for ALL the underwriters...so the client is no worse off and most underwriters are much of a muchness when paying claims.
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  • rick glavocih 5/12/2013 10:49:09 AM
    yes there are companies that I think are trying to bugger the broker input by selling product via credit unions using them as agents still paying the commission but they should remember it was the brokers who were the one who help make these companies and yes they don't like to hear comments like this but its true
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  • John 5/12/2013 11:16:54 AM
    The issue with this is the lack of prior consultation with brokers and also the lack of foresight as to the likely consequences of both the decision and the manor of its delivery.

    It's just another example of the contempt with which brokers are treated by insurers. It's high time the insurers stopped saying 'no, can't or too hard' and started writing business.

    We're all links in a chain, if they think they're being smart by trying to remove brokers, the cluster groups can just as easily negotiate a deal with an underwriting agency or LLoyd's direct and remove a link that way. And we'll see who's laughing then.
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