But total commission bill will fall as insurer is now dealing with fewer brokers
RSA has “no plans” to cut the rate of commission paid to individual brokers, a spokesman said, despite reports suggesting broker commissions would be part of the insurer’s cost-cutting drive.
However, the total amount of broker commission paid by the insurer is likely to fall as it is now dealing with 800 fewer brokers after recent cutbacks.
A Financial Times article last week cited analyst reports suggesting RSA is preparing to cut its global cost base by £150m.
Investment bank UBS issued a research note last week saying RSA needed to cut 7% of its controllable cost base over the next three years to hit its medium-term target of a 12%-15% return on tangible equity (ROTE).
The FT said that as well as job cuts, commissions paid to insurance brokers and technology modernisation were important parts of the insurer’s efficiency drive.
An RSA spokesman clarified that this did not mean the broker would pay individual brokers a lower rate of commission.
But RSA announced in May that it is was exiting relationships with 800 personal motor brokers. This means the company now deals with around 1,200 personal lines brokers, down from 2,000.
As a result the company’s total commission bill is likely to reduce.
RSA has yet to put a its own figure on the amount of cost-cutting it wants to do, but more detail is likely to emerge when the company reports its first half results on 7 August.
The RSA spokesman said the company would be providing more detail about its ROTE target with the half-year results.