News analysis: Brokers can choose their commissions (to a point)

With Groupama and MMA providing some intriguing options for brokers, some are choosing as little as 0% to win business. The idea behind it is for a broker to be able to reach an agreeable price with customers and to charge a fee if they want, giving brokers more choice.

Malcolm Smith, commercial lines director at Groupama, said: "All classes of commercial have been available on our extranet since April, although some networks have asked us not to use it. It is not available on software houses, though we are working on it."

The range of commission varies for each product. Smith had no figures for the number of brokers that have used it but said it had been successful and that he was "very happy with the way it works". For example, for small fleets, brokers can choose between 0-15% commission and can access both the net and gross prices. They could, theoretically, search every percentage until they felt they had the right price for the client.

Another insurer to embrace flexible commissions is MMA. Peter Knowles, head of UK development at MMA, explained that, for master tradesmen, brokers could use their extranets to select a commission between 0-35% to obtain a variable quote; brokers could do this as many times as they liked before needing to quote the customer. He said that 122 cases from 86 broking firms had been transacted in this way in July alone and denied that it was a reaction to Groupama and that it had always been in their plans.

Knowles commented: "We did offer this before on a bespoke basis before but had very few requests from brokers."

He added that MMA is extending the service across other lines and will announce plans soon.

Source: Professional Broking – September 2010