I am concerned, like many of my broking colleagues, at the reducing commissions available for placing business with certain companies.

Some two years ago I had some heated correspondence with a Lloyd's motor syndicate when it reduced commissions without having the courtesy to tell either me or any of its other supporting brokers.

The syndicate stated it was determined to reduce costs in all areas of the distribution chain to achieve profitability and sustain its future. I have no problem with that if that is its strategy. Whichever side of the fence we are on, we are all seeking to make a profit and survive.

Like many small insurance intermediaries my only route into Lloyd's has been via a Lloyd's guaranteeing broker. I recently had a visit from the area manager of my guaranteeing broker who, in the course of conversation, informed me that his firm had recently negotiated a good deal with this same motor syndicate and was now receiving increased commission from it for guarranteeing my account.

Furthermore, the area manager told me that if I increased the amount of business I transacted with the syndicate then he, the area manager, would personally receive a percentage of the increased turnover.

So I, the poor intermediary who incurs all the costs involved in acquiring new business, get my commission cut back, but the guarranteeing broker gets extra income through my efforts and, to add insult to injury, the area manager gets a bonus.

Obviously something is wrong somewhere.

This clearly illustrates the lack of understanding by some insurance companies as to who are their real suppliers of business and where in the distribution channel cutbacks ought to be made.

Incentives are good for business if they are given to the right people.

If it had suggested increasing my commission by whatever amount it is paying the guaranteeing broker, I would gladly try and increase the flow of business to it, but I am damned sure my account will not grow with it if it is lining someone else's pocket.

I wonder how many other deals are out there like this?

Name and address withheld

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