Insurer to offer 20% commission to brokers using motor instalment scheme
Norwich Union (NU) is to compete with the premium finance houses for intermediary business by offering brokers extra commissions.
Brokers that organise monthly instalment payment schedules with their customers through NU for motor policies will receive 20% of the additional fee charged for the service. The fee is typically around 8% of the premium.
Under the arrangement, on a £1,000 motor policy the insurer will receive an additional £80, of which the broker placing the business will take £16.
A spokesman for NU said the move had been piloted with selected brokers for motor policies.
The insurer is now considering extending the scheme to all brokers for all personal lines products.
Glen Murphy, head of business services at NU, said: "Premium finance houses have made strong inroads into the market but we can compete."
Premium finance houses typically offer brokers a fee of less than 4%, or allow them to negotiate an 'over-rider' fee whereby the finance house receives a set percentage of the annual premium and the broker arranges a higher amount with the policyholder, pocketing the excess.
Peter Walsh, of broker Coversure, said of NU's move: "This an extremely attractive rate. I think most brokers would be very interested if it was offered to them."
Brokers benefit from NU's buying power
NU is offering its agency brokers cut-price stationery and IT equipment by allowing them to benefit from the insurance giant's buying power.
By buying in bulk from stationery provider Office Depot, NU can forward savings of around 15% on the typical cost of paper, print cartridges and even paper-clips.
A spokesman for NU said: "Over 150 of our agency brokers signed up in the first week."
"Stationery and IT kit represents a substantial outlay and this is part of our commitment to helping brokers do business cheaper."