Brokers “must do more to reduce the cost of auto insurance,” insists reform group

Insurance brokers have been urged to do more to reduce auto coverage costs.

It comes after details emerged of high levels of commissions paid to brokers by insurers for auto policies.

Last week, the Central Bank said brokerage commissions last year accounted for 17% of the combined value of car premiums in Ireland.

He found that the average car premium is € 622.

If brokers earn 17% commission, that means up to $ 113 will be paid to brokers in commission for the average policy sold. And this year’s numbers only refer to third-party brokers, not those owned by insurance companies that route all business to the parent company.

The high commission levels are one of the reasons there have been over 30 brokerage buyouts in this market in recent years.

UK private equity firm Livingbridge acquired a majority stake in Chill Insurance last year in a deal that would have valued it up to € 100m.

Director of the Alliance for Insurance Reform, Peter Boland called on brokers to help increase competition in the market, in order to reduce the cost of hedging.

The Central Bank’s National Claims Database shows insurers made collective profits of 162 million euros last year, a year when the automobile was severely restricted.

Operating profits were 12%, which is close to “peak profitability,” the central bank said. But premiums only fell 7%, 4% of which were refunds that some insurers paid after being pressured to do so.

Mr Boland said brokers “have also performed very well in auto and liability insurance during the current crisis”.
He said this was evident from the reports of the National Claims Information Database and the rush of acquisitions.

“Many brokers did not cover themselves with glory during the pandemic, resolutely defending the positions of insurers on business interruption claims in the face of all the available evidence. “

Brokers Ireland, which represents 1,225 brokerage firms, was asked if policyholders are getting good value.

He said he found the 17pc commission figure “confusing” and insisted that a typical broker receives around 5pc in commission and usually no more than 10pc.

The brokerage firm said that the definition of third-party intermediaries used by the Central Bank includes AIB, Bank of Ireland and SuperValu Insurance.

He said that due to the volume of insurance they sell, they might charge higher commission rates than smaller brokers.

Brokers Ireland insisted that its members strive for the best value for their clients and do not resist premium reductions to keep commissions high.

He said he was working with the government to encourage more insurers into the market.

About half of the value of auto premiums was sold through brokers last year.

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