Insurer reiterates commitment after commission questions

Insurer reiterates commitment after commission questions | Insurance Business

Insurer reiterates commitment after commission questions
Vero has followed through on promises to provide brokers with tools to help develop their businesses in the SME insurance segment, while defending previous commission reductions on home cover.

The Suncorp brand yesterday released an online video to help brokers promote their value. The video is the second of four tools planned for release in 2014, which were all announced by Vero at the launch of the SME Index earlier this year.

Brokers will be able to use the video to promote their services and expertise to customers by embedding the video on their websites and showing it to customers on tablet computers during meetings.

The video draws on four benefits of using a broker – brokers can save time, provide valuable advice, help provide true value, and have insurance expertise.

Commenting on the release of the video, Suncorp’s executive general manager of commercial insurance distribution, Andrew Mair said: “This is part of an ongoing program Vero is conducting to assist brokers in their efforts to connect with customers in the vital small-to-medium enterprise market.”

Earlier this year, Vero revealed the results of its latest SME Index which showed more than one-third of SMEs who currently buy insurance through direct channels would consider using a broker.

In an Insurance Business TV interview, reported on last week, and related to the Vero SME Index, Mair urged brokers not to be discouraged by the lack of interest of some SMEs in using a broker as it is mainly due to a lack of knowledge or understanding of the broker role, and said it presented an opportunity for brokers to show their worth.

Mair also noted that in addition to Vero launching tools for brokers to help collate and articulate their value, it is rolling out workshops later this year.

The new tool comes at the same time as some brokers have raised concerns that commission reductions on personal lines home cover are a contradiction to Vero’s support of the channel.

John Elliott, director of Elliott Insurance Brokers, is one broker to raise the issue: “The reduction in commissions on home cover created a massive lack of confidence in the way that brokers think Vero place us, what they think our role is and how much they value us. It’s a contradiction in terms when it says it values brokers but has these actions.

Elliott said the decision also created a whole lot more internal work for the business because it had to try to negotiate other deals with insurers in order to shift the business away from Vero. Elliott said several insurers offer very similar deals, ensuring that clients still get the best cover for them.

He added: "For us to remain competitive and write personal lines, it is not just about the commission we get from it, it is the time we spend on it," he said. "We have to spend more time on these policies, which makes us less competitive.”

However, a spokesperson for Vero said that following the decision to adjust commission rates, there had only been limited feedback from its broking distribution network on the changes.

According to Vero, the decision was made in an effort to "provide product offerings that are sustainable and affordable in the long term".

“We took this difficult action on our home cover to ensure our Vero home portfolio remains sustainable in the long term and for brokers to continue to offer their customers home cover for the foreseeable future," the spokesperson explained.

“Home insurance accessibility and affordability has been, and continues to be, a topic that has broad community and political attention. Our position with respect to recent changes was that our portfolio was not delivering the required returns.

“We had increased premiums over the previous three years or so and decided to take a different approach. We still offer the same broad cover and policy holders are no worse off."

Vero claims that in many cases, reducing commissions on home premium levels will likely assist in stabilising the increasing events-related cost pressures the whole industry is facing.

The insurance industry as a whole has recently faced pressure from the Federal Government, which has accused the sector of not doing enough to temper premium increases in disaster-hit areas. It has spawned moves such as that recently announced by CGU, which is currently reviewing the resillience of strata properties which it insures in Far North Queensland in an effort to cut insurance premiums by as much as 25%.

Vero has promised to continue its policy of continually reviewing its products from a range of aspects, including premium affordability and sustainability. The insurer will also continue to roll out its promised broker support tools.

To watch Vero’s video to help brokers promote their value, click here.