IS ZERO COMMISSION SENSIBLE?
Insurance is a very vast subject and requires a knowledgeable PoSP/ Broker/ Advisor to suggest the correct solution.
Commission earned by the PoSP/ Broker/Advisor is their remuneration, which they are eligible for providing a gamut of services.
Insurance companies follow a dynamic pricing strategy based on their claim experience of make / model / fuel type of a vehicle.
Client can seek insurance coverage based on brand of insurance company, earlier claims experience if any, Add-on covers availability, cashless availability in nearby authorized workshop, suggestions from friends/family, and the cost of insurance premium.
The components of a car insurance premium are:
· Own Damage- Accidental damage to the vehicle
· Add-on Coverage-For enhanced coverages like Nil Depreciation, Engine Protect, Consumables, NCB protect, Key loss, and few others
· Third Party Premium- Damage to third party person or property
· GST- Currently 18%
The company propagating zero commission advertisements must realize that only the first 2 components from above list are eligible for commission any which ways.
The PoSP/ Broker/ Advisor has more than 1 role in handholding a client throughout the journey of a vehicle insurance. A client is assisted at each level being:
1. Selecting the insurance company providing coverage for make/model/fuel type. For example, certain diesel run small cars are restricted by few insurance companies. The PoSP being in market will have the knowledge of which insurance company is able to offer insurance coverage for these vehicles
2. For selecting add-on coverage- Certain insurance companies offer add-on coverage for 3 years, some for 5 years, few for 7 years and 2 companies for upto 10 years old vehicle too. This knowledge comes with experience
3. Endorsements- Any addition of accessories, fitment of a CNG kit, change of ownership, address changes can be requirements for which a PoSP/Broker/ Advisor will coordinate with insured and insurance company and arrange for suitable solution
4. Evaluating the cashless garages availability in nearby locality of the client. The number of cashless garages on the insurance company panel is of importance specially in case of mid-segment and premium cars. Not all companies provide cashless services for all brands. This knowhow is of utmost importance as the cost of a big accident can go upto few lac rupees
5. Coordinating the documentation between insurance company, workshop, surveyor and client at time of claim, is also a service provided by a PoSP/Broker/ Advisor
6. Timely renewal notices and reminders are the key to customer retention. In this fast-moving world, a reminder before due date of the insurance getting over it being done by a PoSP/Broker/Advisor to ensure continuity of coverage
So, do you still think Zero Commission is the USP. I beg to differ.
Author is Prabhat Vijh- Director & Principal Officer: iAND Insurance Broker Private Limited
Your Go-To Broker for Risky Business !
3 年When you say zero income, you are burning somebody else money. Most start up are doing the same and they only look at valuation. There is no value addition to the customer. The cost of acquisition for motor business by an insurer is almost 30% through any intermediary. These guys are just cutting the intermediary and going straight using technology. Eventually motor insurance will go direct to insurer as it's a no brainer product. To be very honest how much of value addition can an intermediary bring on in motor insurance apart from personalised service.
Director : Millennium Multi Trade Pvt. Ltd.,
3 年Very True !
General Insurance || Health Insurance || Insurtech || SM STAR HEALTH || GL TURTLEMINT || P G Diploma in Financial Market & Insurance || Gujarat University
3 年Very useful article Sir, When claims arise and zero commission company not respond at that time client call to his advisor for guidance. I have seen many cases where clients take only policies for save premium but dont read all terms and conditions behind low premium.
Awesome post!
If you want to go fast, go alone. If you want to go far, go together.
4 年Interested to know the source of income of zero commission broker. If he is not taking directly in front of client he must be earning something back from insurers not labelling it as brokerage but may be 'business development fees' which is fixed and low?