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It is hardly astounding that a Consumer Federation of America study reveals that insurance providers that pay higher fees to agents and brokers often have higher monthly payments.
Consumer Federation of America also discovered that higher prices for web insurance do not necessarily mean better service for consumers.
"This research confirms that customers are supposed to shop very cautiously for coverage," claimed J. Robert. "The good news is there are insurance firms that disburse negligible or no commissions, propose low on line insure prices and give good consumer service."
"On the other hand, this study also found a lot of insurance corporations in which high commissions convert into high charges, with no gain in service quality," Robert said. "Good insurance on line rates and good service might be found if consumers take the time to comparison shop."
Findings
Consumer Federation of America checked commission information from the 20 top writers of coverage for both private passenger on line insurance policy as well as homeowners insurance. This total commission information combined standard commissions and contingent commissions (paid after insurance policies are sold and depend on special sales or on profitability goals).
The report compared total commissions with cost, insurer profitability and service quality according to complaint information and consumer satisfaction indices. CFA (Consumer Federation of America) found that:
1. Insurers with lower commissions often have lower charges. This isn`t always the situation, so consumers should shop cautiously.
2. There is no proof that disbursing higher fees to an agent or broker produces either improved service or higher customer satisfaction. Actually, there appears to be no connection between the amount of commission paid and the value of service supplied.
3. Several insurance firms propose good deals. Other providers have rates that are almost always high.
In less competitive businesses, several insurance firms might be tempted to interest market share by proposing higher commissions to agents or to brokers in addition to higher costs and, frequently, higher profits for the insurance provider. Credit coverage is one subject in which this type of `reverse competition` is particularly common.
Instructions for Consumers
We offer a number of advices for consumers when shopping for online coverage:
1. Shop around! This study revealed that monthly payment charges usually ascend with commissions, but this is not always correct. Consumers have to be sure to obtain quotes from some of the lowest monthly payment insurance companies, including the direct writers of coverage that normally do not disburse commissions.
2. Customers do not need to pay more in order to obtain excellent service. A number of the insurance providers with the best service records have low prices and also low or even no commissions. It is worthwhile to shop among the insurance providers which have the lowest costs and the highest customer contentment/lowest grievance ratios.
3. In order to receive information about on line policy rates, review country cost information guides. Nearly all the countries have cost information guides. Typically, consumers may download them from the state`s insurance department web site.
4. For complaint information on insurance corporations, check in the National Association of Insurance Commissioners` website, www.naic.org.
5. Be careful with consulting with just 1 insurance agent or broker for ins policy on line, even if that agent represents several insurance corporations. Customers have to be aware that several producers who represent more than one insurance firm could put the consumer in a higher priced insurance company which has larger commissions even when the consumer meets the criteria for a lower cost. States don`t oblige insurance agents or brokers to put the client with the best program for him.
6. Ask insurance agents and brokers the right questions:
Do you act for me or do you act for the insurance firm you`re suggesting I use?
What commission are you earning as a percentage of the cost of the
trip insurance program you`re recommending I buy?
Am I getting the lowest cost among all the insurance policy corporations which you represent for which I meet the requirements?
What additional ins policy online companies do I qualify for that you act for? What are the prices I would pay at those insurance companies and what commission would you gain with each insurance company?
Do you have a contingency commission agreement with the insurance provider you are suggesting? Please completely elucidate that agreement to me.
If I have a claim, do you represent me or do you act for the insurer in the claim procedure? Is your compensation somehow related to claims filed by me or additional customers of yours?
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