It`s hardly astonishing but a Consumer Federation of America (CFA) study reveals that insurance corporations which disburse higher commissions to agents and to brokers usually have higher premiums.
Consumer Federation of America (CFA) also discovered that higher prices of car insure don`t translate into better service for customers.
"This study shows that consumers need to shop very cautiously for insurance," claimed J. Robert. "The good news is that there are insurance firms that pay minimal or even no commissions, provide low online motor insure costs and have great customer service."
"On the other hand, this research also found many insurance corporations in which high commissions translate into high charges, with no improvement in service quality," he said. "Good car insure rates and good service can be found if consumers take the time to compare companies."
Findings
CFA reviewed commission data from the twenty top writers of insurance for both private passenger motor vehicle insurence as well as homeowners coverage. This sum commission information integrated standard commissions and dependent commissions (paid after policies are sold and based on special sales or on profitability goals).
The report compared total commissions with price, insurer profitability and service quality as measured by complaint information and consumer satisfaction indices. CFA (Consumer Federation of America) revealed that:
1. Insurance companies having lower commissions usually have lower rates. This isn`t always the situation, so consumers have to shop cautiously.
2. There`s no evidence that paying higher commissions to an agent or broker produces either improved service or higher customer satisfaction. Actually, there appears to be no connection between the amount of commission paid and the quality of service supplied.
3. A number of insurance companies propose good deals. Other insurance providers have rates that are consistently high.
In less competitive markets, a number of insurance companies might be enticed to attract market share by offering higher fees to agents or to brokers together with higher prices and, frequently, higher gains for the insurance company. Credit coverage is one area in which this kind of `reverse competition` is particularly prevalent.
Advices for Customers
We offer six tips for customers shopping for motors assurance on-line:
1. Shop around! This research revealed that monthly payment charges usually increase with commissions, though this isn`t always correct. Consumers have to be certain to get quotes from a number of the lowest premium insurance corporations, including the direct writers of coverage that normally do not disburse commissions.
2. Customers don`t need to disburse more in order to receive good service. Some of the insurance companies with the best service records have low costs and low or no commissions. It is worthwhile to shop among the insurance firms which have the lowest prices and the highest customer contentment/lowest complaint ratios.
3. To get information regarding motor vehicles insure rates, check state cost information guides. The majority of the countries have price information guides. Typically, consumers can download these guides from the country`s insurance department site.
4. To get grievance information on insurance providers, check with the National Association of Insurance Commissioners` website, www.naic.org.
5. Be careful with consulting with just a single agent or broker for online automobiles insurance, even if that broker represents several insurance companies. Customers must be aware that several agents who represent more than one insurance provider could put the customer in a higher priced company with larger commissions even in case the consumer meets the criteria for a lower cost. States don`t require agents or brokers to place the applicant with the best policy for him.
6. Ask agents or brokers the right questions:
Do you represent me or do you represent the insurance firm you are offering I use?
What commission are you earning as a percentage of the price of the autos assurance program you are offering I buy?
Am I getting the lowest price among all the motors assurance on-line corporations which you represent for which I meet the criteria?
What other autos assurance corporations do I meet the criteria for that you represent? What are the costs I would pay at those insurers and what fee would you earn with every insurance provider?
Do you own a contingency commission agreement with the insurer you`re suggesting? Please completely elucidate that agreement to me.
If I have a claim, do you act for me or the insurance firm in the claim process? Is your reimbursement in any way related to claims filed by me and additional clients of yours?
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