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It`s hardly astonishing but a CFA (Consumer Federation of America) research reveals that insurance companies which disburse higher fees to agents and to brokers tend to have higher monthly payments.
CFA (Consumer Federation of America) also found that higher costs for cars insure don`t mean better service for customers.
"This research shows that customers have to shop very cautiously for coverage," claimed J. Robert. "The good news is there are insurance companies that disburse minimal or even no commissions, provide low on line vehicles coverage costs and give very good consumer service."
"Yet, this research also found plenty of insurance companies in which high commissions translate into high rates, with no gain in service quality," Robert claimed. "Good internet vehicle insurance rates in addition to good service might be found if consumers take the time in order to compare insurance providers."
Findings
Consumer Federation of America reviewed commission data from the 20 leading writers of coverage for both individual passenger car insure as well as homeowners coverage. This sum commission data integrated standard commissions and contingent commissions (paid after insurance policies are sold and depend on special sales or profitability goals).
The research compared total commissions with price, insurer profitability as well as service quality according to grievance data and consumer satisfaction indices. CFA found that:
1. Insurance firms having lower commissions often have lower rates. This is not always the case, so customers must shop carefully.
2. There`s no proof that disbursing higher fees to an agent or to a broker derives either improved service or higher consumer contentment. In fact, there appears to be no correlation between the quantity of commission paid and the value of service supplied.
3. Several insurance companies propose particularly very good deals. Other insurance providers have charges that are constantly high.
In less competitive businesses, a number of insurers may be tempted to interest market share by offering higher commissions to agents or to brokers with higher prices and, sometimes, higher profits for the insurance firm. Credit insurance is one area in which this kind of `reverse competition` is particularly prevalent.
Advices for Consumers
We suggest six advices for consumers when shopping for motor vehicles insure:
1. Shop around! This study revealed that monthly payment charges tend to increase with commissions, although this is not all the time correct. Consumers must be sure to get quotes from a number of the lowest premium insurance corporations, including the direct writers of insurance that typically don`t disburse commissions.
2. Consumers don`t need to pay more to obtain good service. Several of the insurance firms with the best service records have low prices and low or no commissions. It pays to shop among the insurers which have the lowest costs and the highest customer satisfaction/lowest complaint ratios.
3. In order to receive information regarding car insure rates, review country price information guides. Most of the states have price information guides. Usually, consumers may download these guides from the state`s insurance department site.
4. In order to receive grievance information on insurance corporations, check with the National Association of Insurance Commissioners` web site, www.naic.org.
5. Beware of going to only a single agent or broker for vehicle insurance, even in case that agent represents several insurance corporations. Consumers have to know that some agents representing more than 1 insurance firm could put the consumer in a higher priced insurance provider with larger commissions even if the consumer meets the criteria for a lower cost. States don`t oblige insurance agents or brokers to put the consumer with the best insurance plan for him.
6. Ask insurance agents and brokers the right questions:
Do you act for me or do you represent the insurance company you are offering me?
What commission are you earning as a percentage of the price of the motors insurence online plan you are recommending me to purchase?
Am I receiving the lowest cost among all the automobile ins providers which you represent for which I meet the requirements?
What other internet vehicle insurance corporations do I meet the requirements for that you act for? What are the costs I would pay at those companies and what fee would you receive in every firm?
Do you have a contingency commission arrangement with the insurance provider you`re offering? Please fully explain that agreement to me.
If I have a claim, do you act for me or do you represent the insurance firm in the claim process? Is your recompense somehow related to claims filed by me and by other customers of yours?
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