The cost of distribution
Tony Cornell asks if clients are getting value for money from increased commission levels?
Insurers have to distribute their products to market. Originally, it was directly through own case agencies, the local bank manager, solicitor, garage, building society, accountant or an in-house sales force. All products of any complexity normally had to be sold by an employee of the insurer.
Expenses were high but the amount paid to third parties out of the premium for selling or introducing customers was low – normally in the 7.5-15% range. The market was subject to a pricing tariff so there
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