The market has never had a better opportunity to grasp the nettle of broker remuneration and ensure that intermediaries are paid what they are worth.
The reason, of course, is the fall-out from Spitzer. The whole debacle means that henceforth, transparency will be the watchword. Whether remuneration is via commission or a fee on top of a net rate, the client will know who is getting what.
We need to ensure two things happen.
First, we must resist the temptation to blur the scene by devising complicated ways of isolating broker expenses so insurers can pay them. That is not progress. It is simply dividing the commission cake and giving one piece another name.
Why not simply pay an amount of commission that equals the gross amount of remuneration the broker has earned? What are we afraid of?
And this feeds into the second imperative: as far as net business is concerned, brokers must charge a realistic amount that covers costs and allows for a reasonable return. To do otherwise is pure commercial folly. Or am I missing something?
Sure, there will be the threat of a rival broker seeking to undercut the original fee. But surely most broker-client relationships are strong enough to survive such scrutiny? If the broker has done a thorough, professional job, he should expect proper remuneration.
If the client wants something done on the cheap, so be it - they will regret it.
Buy cheap, buy twice, as the saying goes.
I know it is not easy for brokers in a viciously competitive market. Pressure on costs is intense. But other professionals, such as lawyers, architects and accountants, do not seem prone to the crises of confidence that afflict some in the intermediary arena. And
I can personally vouch for the extreme professionalism of those same brokers.
The message is simple: it is time for brokers to be paid what they deserve. Market circumstance has, perhaps perversely, given us the chance to effect change in the way we conduct business. Let us seize the day.
Stephen Fitzgerald
Managing director
DA Constable Syndicate
