Insurers stand together on broker commissions

Insurers stand together on broker commissions

Insurers stand together on broker commissions

Major insurers have told Insurance Business they have no plans to reduce commissions following Vero’s plans to cut rates on home cover.

Vero this week revealed plans to cut broker commissions on personal insurance home cover from 22.5% to 15% from 1 February 2014 in a move to “stabilise the increasing events-related cost pressures on home premium levels”.

Insurance Business asked a number of major insurers if they had any plans to cut broker commissions, and four insurers were quick to respond, stressing they had no plans to reduce commissions on any lines

A spokeswoman for Wesfarmers said: “Wesfarmers Insurance is firmly committed to servicing the broker market through Lumley Insurance. We have no immediate plans to change the commission structure on any of our product lines.”

Tony MacRae, executive general manager of intermediary distribution for QBE Australia, said: "QBE will continue to focus on our costs of acquisition but believe that with the savings we're realising from our business transformation, which will also enable us to deliver leading edge customer service, we see no need to reduce commissions in the immediate term."

Allianz and CGU also stated they had no intention to reduce commission rates.

AIG and Zurich had not provided comment at the time this story went to press.
 

8 Comments
  • Peter Vickers 4/12/2013 10:00:59 AM
    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.
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  • James 4/12/2013 10:21:32 AM
    Totally agree with Peter, the underwriters better beware. What would stop someone the likes of Steadfast or Austbrokers setting up there own insurance companies ?
    Post a reply
  • Rod Parsons 4/12/2013 11:26:57 AM
    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.
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