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It is hardly astounding but a CFA research discovers that insurance providers which disburse higher commissions to agents and brokers tend to have higher monthly payments.

Consumer Federation of America (CFA) also revealed that higher costs of motors insurence online do not necessarily mean improved service for customers.

"This research shows that customers are supposed to shop very carefully for coverage," claimed J. Robert. "The good news is there are insurance corporations that disburse negligible or even no commissions, offer low autos insurance costs and have good consumer service."

"However, this study also found a lot of companies where high commissions translate into lofty rates, with no improvement in service quality," he said. "Good motor vehicles insure rates in addition to service could be found in case consumers take the time in order to compare insurance companies."

Findings

CFA researched commission information from the 20 most important writers of coverage for both private passenger online auto ins as well as homeowners insurance. This total commission information integrated ordinary commissions and dependent commissions (paid after insurance policies are sold and depend on unique sales or on profitability goals).

The research compared sum commissions with cost, insurer profitability and service quality as measured by grievance data and customer contentment indices. CFA (Consumer Federation of America) found that:

1. Insurance companies with lower commissions often have lower rates. This isn`t always the case, so consumers should shop cautiously.

2. There is no evidence that paying higher fees to an insurance agent or broker produces either improved service or higher consumer contentment. In fact, there appears to be no correlation between the quantity of commission paid and the value of service given.

3. Some insurance providers propose particularly high-quality deals. Other insurers have charges that are almost always high.

In less competitive businesses, a number of insurers may be enticed to attract market share by proposing higher fees to agents or brokers in addition to higher costs and, frequently, higher gains for the insurance provider. Credit coverage is one area in which this sort of `reverse competition` is particularly frequent.

Instructions for Consumers

We suggest several advices for customers when shopping for online cars assurance:

1. Shop around! This study revealed that premium charges tend to increase with commissions, but this isn`t always correct. Consumers are supposed to be certain to get quotes from a number of the lowest monthly payment insurance companies, including the direct writers of insurance that regularly don`t disburse commissions.

2. Consumers don`t have to disburse more to receive good service. A number of the companies with the most excellent service records have low prices and also low or no commissions. It is worthwhile to shop between the firms with the lowest costs and the highest consumer contentment/lowest complaint ratios.

3. In order to receive information about internet vehicle insurance rates, check state cost information guides. The majority of the countries have price information guides. Normally, consumers can download these guides from the state`s insurance department site.

4. To receive grievance information on insurance corporations, check in the National Association of Insurance Commissioners` Internet site, www.naic.org.

5. Be cautious with going to only one insurance agent or broker for online automobiles insurance, even if that broker represents a number of insurance companies. Customers should be aware that several brokers who represent more than one insurer might put the customer in a higher priced insurance firm which has larger commissions even if the customer meets the requirements for a lower price. States don`t require insurance agents and brokers to put the customer with the best program for him.

6. Ask agents or brokers the right questions:

Do you act for me or do you represent the insurance company you are recommending me to use?

What commission are you earning as a percentage of the price of the auto coverage online policy you`re offering I buy?

Am I receiving the lowest cost between all the online cars assurance corporations which you represent for which I meet the criteria?

What additional vehicle insurance providers do I qualify for that you act for? What are the prices I would pay at the other insurance companies and what commission would you gain with each insurer?

Do you have a contingency commission agreement with the insurance company you`re offering? Please completely clarify it to me.

If I file a claim, do you represent me or the insurance provider in the claim procedure? Is your recompense somehow connected to claims filed by me and by additional customers of yours?

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