Right to know insurance broker's commission.

[Grass And Grain]

There's currently a thread running about insurance...

Acres insurance recommendation

3 years ago we moved away from NFU mutual insurance to F&M. At the time I posted about the saving which was shocking, F&M effectively halved what we had been paying the NFU and over the last 3 years that's the best part of £100k saved ! At the time it was suggested that although we might be...

thefarmingforum.co.uk

This got me thinking. I believe commercial customers have the right to ask their insurance broker what amount of commission they are receiving on the deal.

Wondered if anyone had ever asked the question?

I've never asked, but thinking maybe I should do next time.

Would it get their backs up, or wpuld it help negotiate a better price? Ask them before the quote, or after?

Any thoughts.

 

[Steevo]

You may find this interesting....

Who do you insure with?

I don’t like to swap around. I have had a couple of different insurers approach me in the last couple of months so I may get quotes, but as long as Grosvenor are somewhere near I will stick with them. If they are way out we may need to have a conversation! I value good service above cheap...

thefarmingforum.co.uk

 

[Grass And Grain]

Thank you, Acres man on that thread says they charge 20%, but he thinks NFU agents only get about 8%. Maybe the NFU agent gets a steady flow of repeat bisiness, so 8% is OK.

I guess the final quote is the important thing.

 

[David.]

At the end of the day, what matters is if the quote before you represents a comparatively competitive price for the most appropriate cover for your needs. If it does, does it matter what percentage they get to enable them to pay their overheads, make some profit, and live?

 

[Roger Perry]

Probably depends if the agent is working for an independent underwriter or is a captive agent tied to one company.

 

[Steevo]

Thank you, Acres man on that thread says they charge 20%, but he thinks NFU agents only get about 8%. Maybe the NFU agent gets a steady flow of repeat bisiness, so 8% is OK.

I guess the final quote is the important thing.

I think a lot of it is down to the fact that an independent broker has many more costs to cover than an NFUM agent as it's a slightly different business model. The NFUM HQ cover quite a few tasks ad services for their agents e.g. advertising, possibly HR etc. in just the same way a McDonalds franchisee doesn't have to advertise the brand on tv to attract customers, source ingredients, develop recipes, do all the regulatory bits and bobs etc. that an independent shop would need to do.

At the end of the day, what matters is if the quote before you represents a comparatively competitive price for the most appropriate cover for your needs. If it does, does it matter what percentage they get to enable them to pay their overheads, make some profit, and live?

Agreed. The cynic in me recognises that a broker is not quite as independent as the customer might like to think. Trust has been rather abused in many industries in the last decade or so.

I think it might surprise many how much, in cash terms, a broker does net for doing their job. Don't get me wrong, I'm not saying it's easy or cheap to be a broker - far from it, they deserve to earn their crust and doing the job properly has quite a cost to it I'm sure.

Yet if the customer knows what £ the broker is earning, it gives a bit of an idea of the amount of work the customer would be expecting the broker to be putting in on their behalf each year for renewal. If the premium keeps going up, the broker sends the report over to the farmer year on year which keeps saying "we recommend this cover as being competitive in the marketplace" and they are netting 20-30% for doing very little work then it might make some think. The customer is paying the broker.....but since they are doing so indirectly so it's not as clear cut as it could be. A bit like serviced agronomy if you will.

I must admit I admire and respect @Nigel Wellings hugely for his comment "Part of me wonders if we should do so as a matter of transparency.".

 

[Grass And Grain]

I suppose I would rather pay 20% to an agent who offers good service, sorts out claims swiftly and efficiently; than pay 10% for poor service.

Of course, 10% with a good service would be even better ?

Mindst you, if my agent is making £1,400 a year from me, then they are getting a bit fat for what can't be more than 1-2 days work per year.

 

[Steevo]

I suppose I would rather pay 20% to an agent who offers good service, sorts out claims swiftly and efficiently; than pay 10% for poor service.

Of course, 10% with a good service would be even better ?

Mindst you, if my agent is making £1,400 a year from me, then they are getting a bit fat for what can't be more than 1-2 days work per year.

If you think about the number of customers your insurer/broker has....I doubt they could justify spending 1-2 days on each customer. Possibly in Y1, but certainly nothing like that for renewal.

I'd be surprised if my insurer spent more than 1hr per £1000 of my insurance bill each year. A 1hr meeting each year to check things, 30mins travel each way, still leaves quite a lot of time left to make any changes needed to values, extra buildings or swapped machines etc.

I may be completely out there though.....

 

[Nigel Wellings]

On some larger Insurance cases , probably £40k a year plus we will sometimes charge a fee instead of commission. A major advantage of this is that there is no insurance premium tax on that fee, there by saving the client 12% on the commission element. It is difficult though without working like solicitors where we charge for every 10 or 20 minutes to know where to pitch the level of the fee. Do you really want to be charged for every time you ring up to make a change or make a claim? Depending on the amount of work we will be in the region of 15% if working on this basis.
Working on a commission basis I feel that some years on an individual client basis we make a reasonable margin out of that client others where there has been a time consuming claim or a lot of changes on policies then it is marginal. Remember it is not just the direct costs of dealing with your insurance that your commission has to cover but all our fixed costs such as rent, computers,phones etc. Majority of Brokers margin on commission turnover wont be much more than 10%.
Watch out though for certain large Brokers that are earning substantially higher commissions because of their market clout and then also charge fees for every adjustment you make throughout the year, pure greed in my opinion.

 

[Ace864]

I don't think that it is even possible to find out there comission

 

[LeahTerry]

I think you definitely have a right to ask it before making any deals. If it's a good broker I usually don't mind paying him up to 25%. But as was mentioned by Nigel above, the majority of brokers have a margin on commission not higher than 10%. It's a pretty reasonable commission because it's difficult to find a good insurance agent.

 

[Nigel Wellings]

I don't think that it is even possible to find out there comission

You have a legal right to request details of any commission paid to the Broker and under Broker conduct rules overseen by the Financial Conduct Authority (FCA) we have to disclose our commission if requested. I cannot see why any Broker should not be willing to disclose this.

 

[Kiwi Pete]

There's currently a thread running about insurance...

Acres insurance recommendation

3 years ago we moved away from NFU mutual insurance to F&M. At the time I posted about the saving which was shocking, F&M effectively halved what we had been paying the NFU and over the last 3 years that's the best part of £100k saved ! At the time it was suggested that although we might be...

thefarmingforum.co.uk

This got me thinking. I believe commercial customers have the right to ask their insurance broker what amount of commission they are receiving on the deal.

Wondered if anyone had ever asked the question?

I've never asked, but thinking maybe I should do next time.

Would it get their backs up, or wpuld it help negotiate a better price? Ask them before the quote, or after?

Any thoughts.

In my experience, if your broker is less than forthcoming about how they get their funding, you need a better broker.
He even goes into detail about which products and companies would pay him more, and why he still doesn't advise clients to insure with those companies, if there's a better option.

With guys like that, it makes me very aware what the other end of the spectrum must be like, ie completely inauthentic

 

[FonterraFarmer]

In my experience, if your broker is less than forthcoming about how they get their funding, you need a better broker.
He even goes into detail about which products and companies would pay him more, and why he still doesn't advise clients to insure with those companies, if there's a better option.

With guys like that, it makes me very aware what the other end of the spectrum must be like, ie completely inauthentic

I deal direct with FMG, canny be arsed otherwise.
Nice warm sunny day in Toronto, allegedly.

 

[Kiwi Pete]

I deal direct with FMG, canny be arsed otherwise.
Nice warm sunny day in Toronto, allegedly.

I have looked at switching to FMG. Just a bit too expensive on the basics, so for what we want, the same expenditure gives less comprehensive cover

 

[Steevo]

google UK ENERGY BROKER CLAIMS 2023 - or email me @ [email protected]......0161 300 2135
We’re helping thousands of businesses claim back any secret, hidden or undisclosed commission potentially paid to your energy broker/TPI over the years.

Our claims service is in relation to the 2020 Ofgem investigation into the mis-selling of Business Energy contracts. The investigation found that 90% of those that have used a broker to arrange their Gas or Electricity contracts were mis-sold to and are now able to reclaim a large proportion of this money back.

View attachment 1120278

This thread is about insurance broker commission, not energy broker commission.

 

[Pateleygrower]

There's currently a thread running about insurance...

Acres insurance recommendation

3 years ago we moved away from NFU mutual insurance to F&M. At the time I posted about the saving which was shocking, F&M effectively halved what we had been paying the NFU and over the last 3 years that's the best part of £100k saved ! At the time it was suggested that although we might be...

thefarmingforum.co.uk

This got me thinking. I believe commercial customers have the right to ask their insurance broker what amount of commission they are receiving on the deal.

Wondered if anyone had ever asked the question?

I've never asked, but thinking maybe I should do next time.

Would it get their backs up, or wpuld it help negotiate a better price? Ask them before the quote, or after?

Any thoughts.

Yes, if it is a commercial policy and you ask, the broker/agent has to tell you their commission. As mentioned already, most NFUM agents are between 8-10% with no difference between commercial and personal insurance policies.

 

[FonterraFarmer]

I have looked at switching to FMG. Just a bit too expensive on the basics, so for what we want, the same expenditure gives less comprehensive cover

Can cut both ways, being agricultural based, tend to be better understanding with claim's than the other insurance companies.
Vero I can say are bunch of pricks to deal with.