Best Rates For Insurance Coverage

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It is hardly surprising but a CFA study discovers that insurance companies which pay higher commissions to agents and brokers tend to have higher premiums.

CFA also found that higher prices of insurence do not mean improved service for consumers.

"This study proves that consumers must shop very carefully for insurance," said J. Robert. "The good news is that there are insurance corporations that disburse minimal or no commissions, provide low coverage online prices and give great customer service."

"On the other hand, this research also found many insurance corporations in which high commissions convert into lofty rates, with no improvement in service quality," J. Robert said. "Great insure coverage rates and also good service can be found if customers take the time in order to compare companies."

Findings

CFA reviewed commission data from the twenty top writers of insurance for both private passenger ins and homeowners coverage. This sum commission information integrated ordinary commissions and dependent commissions (paid after policies are sold and depend on special sales or profitability goals).

The study compared sum commissions with cost, insurer profitability as well as service quality as measured by grievance information and consumer contentment indices. CFA (Consumer Federation of America) revealed that:

1. Insurance providers having lower commissions usually have lower rates. This is not always the situation, so consumers have to shop carefully.

2. There`s no proof that paying higher commissions to an agent or to a broker produces either better service or higher customer contentment. In fact, there appears to be no connection between the amount of commission disbursed and the quality of service provided.

3. Several insurance providers offer particularly good deals. Other companies have charges that are consistently high.

In less competitive industries, a number of insurance providers may be tempted to attract market share by proposing higher fees to agents or to brokers with higher prices and, often, higher gains for the insurance firm. Credit coverage is one area where this sort of `reverse competition` is most prevalent.

Tips for Consumers

We propose a number of tips for customers when shopping for insurance online:

1. Shop around! This study discovered that premium charges often ascend with commissions, though this is not always true. Consumers have to be certain to receive quotes from some of the lowest premium insurance corporations, including the direct writers of coverage that normally do not pay commissions.

2. Consumers do not have to disburse more in order to obtain excellent service. A number of the insurers which have the best service records have low prices and low or no commissions. It is worthwhile to shop between the insurance companies which have the lowest costs and the highest customer satisfaction/lowest grievance ratios.

3. To get information regarding on line insurance rates, review country price information guides. Most countries have price information guides. Typically, customers may download these guides from the country`s insurance department Internet site.

4. In order to get complaint information on insurance providers, check with the National Association of Insurance Commissioners` Internet site, www.naic.org.

5. Beware of consulting with just 1 insurance agent or broker for ins coverage, even in case that agent represents several insurance corporations. Consumers have to know that several agents who represent more than one company might put the customer in a higher priced insurance firm with larger commissions even in case the consumer meets the criteria for a lower price. States do not oblige insurance agents and brokers to place the client with the most excellent policy for him.

6. Ask insurance agents and brokers the right questions:

Do you act for me or do you act for the insurance company you are offering I use?

What commission are you gaining as a percentage of the cost of the insure program you are proposing I purchase?

Am I receiving the lowest price among all the ins providers which you represent for which I meet the criteria?

What additional online coverage corporations do I qualify for that you represent? What are the costs I would disburse at those insurance providers and what commission would you receive with every company?

Do you own a contingency commission agreement with the insurance provider you`re offering? Please fully clarify that arrangement to me.

If I have a claim, do you represent me or do you represent the insurance company in the claim process? Is your reimbursement in any way related to claims filed by me or by additional customers of yours?

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