It is barely surprising but a Consumer Federation of America research finds that insurance companies which pay higher commissions to agents and brokers usually have higher monthly payments.
CFA also discovered that higher prices for vehicleinsurance don`t mean better service for consumers.
"This study shows that consumers need to shop very carefully for coverage," claimed J. Robert. "The good news is there are insurance firms that pay minimal or no commissions, offer low auto coverage prices and give good customer service."
"However, we also found a lot of insurance companies in which high commissions translate into high charges, with no improvement in service quality," he said. "Good automobile online insure rates and good service can be found in case customers take the time to comparison shop."
Findings
CFA researched commission data from the 20 most popular writers of insurance for both individual passenger autos insurance and homeowners insurance. This total commission information integrated ordinary commissions and contingent commissions (paid after insurance policies are sold and based on unique sales or on profitability goals).
The study compared total commissions with cost, insurer profitability and service quality according to complaint data and consumer satisfaction indices. CFA (Consumer Federation of America) revealed that:
1. Insurance providers with lower commissions usually have lower charges. This is not always the case, so customers have to shop carefully.
2. There is no proof that disbursing higher fees to an insurance agent or broker derives either better service or higher customer satisfaction. In fact, there appears to be no connection between the amount of commission paid and the value of service rendered.
3. Several insurance firms offer high-quality deals. Other insurers have charges that are almost always high.
In less competitive markets, several insurance providers might be enticed to interest market share by proposing higher commissions to agents or to brokers along with higher costs and, sometimes, higher gains for the insurance provider. Credit coverage is one subject where this sort of `reverse competition` is particularly common.
Tips for Consumers
We propose six advices for customers shopping for automobile coverages on line:
1. Shop around! This study discovered that premium charges usually ascend with commissions, but this isn`t always true. Consumers have to be certain to receive quotes from several of the lowest premium insurance providers, including the direct writers of insurance that regularly don`t disburse commissions.
2. Customers do not need to pay more in order to receive good service. Some of the insurers with the best service records have low prices and also low or no commissions. It is worthwhile to shop between the insurance firms with the lowest costs and the highest customer contentment/lowest grievance ratios.
3. In order to get information on cars online insure rates, check country cost information guides. Most countries have cost information guides. Usually, consumers may download these guides from the country`s insurance department web-site.
4. In order to receive grievance information on insurance companies, check in the National Association of Insurance Commissioners` Internet site, www.naic.org.
5. Be cautious with consulting with only one insurance agent or broker for on line auto coverage, even if that broker represents several insurance companies. Consumers should be aware that some agents representing more than 1 insurance firm could put the customer in a higher priced insurer with larger commissions even when the customer meets the criteria for a lower cost. States don`t oblige agents and brokers to place the applicant with the best insurance plan for him.
6. Ask insurance agents and brokers the right questions:
Do you represent me or do you represent the insurance firm you are offering me?
What commission are you gaining compared to the cost of the automobiles insurance program you are recommending I buy?
Am I getting the lowest price between all the online vehicle ins firms which you represent for which I meet the criteria?
What other autos assurance companies do I qualify for that you represent? What are the prices I would pay at the other companies and what commission would you earn in every one of them?
Do you own a contingency commission agreement with the insurance provider you`re offering? Please completely elucidate it to me.
If I have a claim, do you act for me or do you represent the insurance provider in the claim procedure? Is your recompense somehow related to claims filed by me or by additional customers of yours?
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