It`s hardly astounding that a Consumer Federation of America study finds that insurance firms that pay higher fees to agents and brokers tend to have higher premiums.
CFA also found that higher prices for insure policy on line don`t translate into better service for consumers.
"This study confirms that consumers should shop very carefully for coverage," claimed J. Robert. "The good news is that there are insurance firms that disburse minimal or even no commissions, offer low on line coverage prices and give very good customer service."
"Yet, we also found abundance of insurance firms where high commissions convert into lofty charges, with no increase in service quality," J. Robert claimed. "Great on line insure coverage rates as well as good service might be found in case consumers take the time in order to compare insurance providers."
Findings
Consumer Federation of America researched commission data from the twenty most important writers of coverage for both private passenger insurance policy online as well as homeowners coverage. This sum commission information combined ordinary commissions and dependent commissions (paid after insurance policies are sold and depend on special sales or on profitability goals).
The research compared sum commissions with price, insurer profitability as well as service quality according to complaint information and customer contentment indices. Consumer Federation of America (CFA) found that:
1. Insurance companies which have lower commissions tend to have lower charges. This isn`t always the case, so customers have to shop carefully.
2. There`s no evidence that paying higher fees to an agent or broker produces either better service or higher customer contentment. In fact, there seems to be no connection between the amount of commission disbursed and the quality of service provided.
3. Some insurance companies offer high-quality deals. Other insurance companies have charges that are consistently high.
In less competitive markets, a number of insurers might be tempted to interest market share by proposing higher fees to agents or brokers along with higher prices and, frequently, higher gains for the insurance company. Credit coverage is one subject in which this kind of `reverse competition` is particularly common.
Tips for Customers
We suggest several tips for customers when shopping for ins:
1. Shop around! This research revealed that monthly payment charges tend to rise with commissions, although this isn`t always correct. Consumers must be sure to receive quotes from some of the lowest monthly payment insurance corporations, including the direct writers of coverage that regularly don`t pay commissions.
2. Consumers do not have to pay more to obtain excellent service. Some of the insurance companies which have the most excellent service records have low prices and low or no commissions. It is worthwhile to shop between the insurance companies with the lowest prices and the highest customer contentment/lowest complaint ratios.
3. To get information regarding coverage on line rates, review state cost information guides. The majority of the countries have these guides. Usually, customers can download them from the country`s insurance department web-site.
4. To get complaint information on insurance firms, check with the National Association of Insurance Commissioners` web-site, www.naic.org.
5. Beware of going to just 1 agent or broker for insurance online, even in case that insurance agent represents several insurance corporations. Consumers must be aware that some agents who represent more than one company might put the customer in a higher priced insurance firm with larger commissions even in case the consumer meets the requirements for a lower cost. States do not necessitate insurance agents or brokers to put the consumer with the most excellent insurance policy for him.
6. Ask insurance agents and brokers the important questions:
Do you act for me or do you represent the insurance firm you are offering me to use?
What commission are you gaining as a percentage of the price of the online insure policy policy you`re offering I purchase?
Am I receiving the lowest cost among all the online ins policy firms which you represent for which I meet the criteria?
What other insurance policy on line providers do I qualify for that you act for? What are the costs I would pay at the other firms and what commission would you earn in each insurance provider?
Do you own a contingency commission agreement with the insurance provider you are offering? Please fully clarify that agreement to me.
If I file a claim, do you act for me or the insurance company in the claim procedure? Is your recompense in any way connected to claims filed by me or by additional customers of yours?
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