Experts share their views on commission rate demands as they respond to the parting of the ways between the insurer and the broker.
The schism between Global Risk Partners (GRP) and Aviva was completed last month as the provider pulled all the consolidator’s agencies.
Insurers have been guarded about weighing in on the situation.
Speaking before yesterday’s announcement (4 June) that Allianz was extending its partnership with GRP-owned Higos, Simon McGinn declined to comment on GRP matters.
The insurer had been linked to GRP when Aviva cancelled Alan & Thomas’ agency this April with reports citing a disagreement over commission demands.
Consistent
Speaking more generally, the general manager for commercial and personal at Allianz argued that it had shown a consistent approach “for years”.
“The complaint I get sometimes is that we are very focused on the numbers,” he explained adding that it keeps “a very close eye” on commissions.
“We review our commission base right across the piece and make sure that we do deals that are fair to the customer, broker and Allianz,” he stressed.
McGinn observed that levels of commission demands from brokers were currently consistent rather than notably higher and that the company was not buying in business.
“I would be very surprised if we suddenly became very profligate,” he stated.
Adding: “It is for the broker to determine what the best option for the customer is. They certainly should not be in the position where they move a customer to an inferior product or service.”
Blankets
He summed up that the insurer did not have a “blanket approach” to commission preferring to have “precision” in every decision.
Ageas also has a relationship with GRP and François-Xavier Boisseau, chief executive officer for insurance, said the company judged every deal “on their own merits”.
“There is no blanket statement to make on any of our partners,” he noted.
“Sometimes it makes sense to do business and sometimes it doesn’t.”
Boisseau added that GRP would be managed based on performance.
Trend
As to whether there was a wider push from brokers for more commission he accepted it had been a recurring theme for the last 10 years.
“It is not original and not a new trend.
“With consolidation comes pressure on commission. It is up to each insurer to design its own reaction.”
However he warned: “If higher commission doesn’t work we just walk away. It is pretty straightforward.”
Continuing the theme, Jon Walker, executive managing director of Axa Commercial described the ongoing relationship with GRP as “fine” but included a generic caveat.
“It is no different to any other relationship that we have,” he began.
“If the dynamics make sense, the numbers stack up, and we think we can jointly do the right thing, with the customer firmly in the mix, then we will work with a partner. If the numbers don’t stack up we reserve the right to say no.”
Conversations
Asked if he was seeing a rising level of broker demand for commission he responded: “When acquisitions are gathering pace there is almost an inevitability that it feels as though there are requests around increased remuneration.”
Walker admitted that historically consolidation had led to higher costs of doing business for insurers.
“Just buying another broker doesn’t automatically mean that an insurer will end up with a bigger market share, that insurer will already have a book of business with the [acquired] broker,” he pointed out.
And he maintained that Axa was not going out of its way to target more GRP business in light of the broker’s separation from Aviva.
“GRP, or any broker for that matter, first and foremost has a responsibility to do the right thing for the customer,” he highlighted.
“If there is something we can do to help from a customer basis we would look to do it. That is where the focus has to be – making sure the customers’ needs are met and fulfilled.”
TCF
Zurich also confirmed that it would continue to work with GRP.
“This is a competitive market, and we will write new business in line with our appetite and our usual approach to providing cover that’s right for our customers,” a spokesperson told Insurance Age.
“Commission structures do morph over time – as anything does – but we haven’t seen any notable change in our conversations with brokers around the commission they earn.”
RSA, while declining to comment on GRP directly, did advise that it continually reviewed broker commission level.
“We do not pay commission payments that would have an adverse impact on a broker’s duty to treat its customers fairly,” a spokesperson reported.
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