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It is barely astonishing but a Consumer Federation of America research finds that insurance corporations that disburse higher commissions to agents and brokers tend to have higher premiums.
Consumer Federation of America also discovered that higher costs for instant online insure do not mean improved service for customers.
"This study shows that consumers have to shop very carefully for insurance," claimed J. Robert. "The good news is there are insurance corporations that pay minimal or even no commissions, provide low online motor insure costs and give very good customer service."
"However, this research also found a lot of insurance corporations in which high commissions convert into high charges, with no increase in service quality," he claimed. "Great motor vehicles insure rates as well as good service can be found in case consumers take the time to compare companies."
Findings
CFA (Consumer Federation of America) checked commission information from the 20 top writers of insurance for both private passenger automobiles coverage and homeowners coverage. This total commission information integrated ordinary commissions and dependent commissions (paid after insurance policies are sold and based on unique sales or profitability goals).
The research compared total commissions with cost, insurer profitability and also service quality according to complaint information and customer satisfaction indices. Consumer Federation of America revealed that:
1. Insurance companies with lower commissions often have lower charges. This is not always the case, so customers should shop carefully.
2. There`s no evidence that paying higher fees to an agent or broker derives either improved service or higher consumer contentment. Actually, there appears to be no connection between the amount of commission disbursed and the quality of service provided.
3. A number of insurance providers propose particularly very good deals. Other insurance companies have charges that are consistently high.
In less competitive industries, a number of insurers might be enticed to interest market share by offering higher fees to agents or to brokers with higher prices and, sometimes, higher profits for the insurance firm. Credit coverage is one area where this kind of `reverse competition` is particularly common.
Advices for Consumers
We give a number of tips for customers shopping for vehicle insurance:
1. Shop around! This study discovered that premium charges usually rise with commissions, though this is not always true. Consumers should be sure to get quotes from several of the lowest monthly payment insurance providers, including the direct writers of insurance that usually don`t pay commissions.
2. Customers don`t have to disburse more to receive excellent service. Some of the insurance providers with the best service records have low prices and also low or even no commissions. It is worthwhile to shop between the insurance companies with the lowest costs and the highest customer contentment/lowest grievance ratios.
3. For information on online motor insure rates, check state price information guides. The majority of the countries have price information guides. Normally, customers are able to download these guides from the country`s insurance department web site.
4. To receive grievance information on insurance companies, check in the National Association of Insurance Commissioners` website, www.naic.org.
5. Be cautious with going to only one insurance agent or broker for car insure, even if that broker represents a number of insurance providers. Customers have to know that some producers who represent more than a single insurance firm might place the consumer in a higher priced insurer with larger commissions even in case the consumer meets the criteria for a lower cost. States do not oblige agents or brokers to place the customer with the most excellent plan for him.
6. Ask insurance agents or brokers the important questions:
Do you act for me or do you represent the insurance firm you are proposing me?
What commission are you earning compared to the cost of the automobiles coverage program you are recommending me to buy?
Am I receiving the lowest cost between all the auto coverage online companies which you represent for which I meet the requirements?
What other motor vehicle insurence firms do I meet the requirements for that you act for? What are the costs I would disburse at those companies and what commission would you earn with each one of them?
Do you have a contingency commission arrangement with the insurance provider you`re offering? Please fully elucidate that arrangement to me.
If I file a claim, do you act for me or the insurer in the claim procedure? Is your compensation in some way connected to claims filed by me and by other clients of yours?
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