Groupama's managing director Tim Ablett is calling for the end of "archaic" flat commission rates for brokers.

Ablett said brokers' fees should be a true reflection of "the real cost of doing business".

"There are some policies that brokers place for which the premiums are so small, the broker does not make enough money to even cover his costs," he said.

He told Insurance Times that under the current system, brokers are reluctant to take on extra work because they don't get paid for it.

"All the money brokers get is up-front and when it comes to a claims issue, they don't want to know about it," he said.

Ablett added that insurers and brokers needed to hold talks on how to establish a more equitable payment system.

One suggestion was that brokers were paid fees on a tiered basis, so they earned higher fees for more complex business.

"We are increasingly seeing this in commercial business - why shouldn't it happen elsewhere?" he said.

Insurers AXA and Avon recently announced that brokers' commission percentage is to be cut, to take into account rising premium rates.

But Ablett maintained insurers did this because they didn't believe the cost benefit ratio of their broker book was right.

He added that Groupama would gladly reassess its payment system if it could get brokers to agree.

"I would like to think we as an industry could take more of a scientific approach to broker payments," he said.

"If we don't start accepting change after 11 September, there is something wrong."

But Institute of Insurance Brokers director general Andrew Paddick said the only fair way for brokers to be remunerated would be on a net commission basis.

"We need to have net rates, so it is not up to the insurer to decide how much the broker earns," he said. "The insurer is just the risk carrier and brokers should be able to run their own business."

For the net rate system to work there would need to be a solution to enable brokers to add their own commission.