Fees and commissions

Readers respond on the USA Fee Costing email.

Hi Angelo

Regarding the e-mail on USA fee costing, I am positive that worst results would come to light if we did the same analysis in SA. And this is what annoys me so much about our insurance giants when they always refer to our commission as the major cost factor.

Our leading insurance companies have over the past 5 years transferred more duties and responsibilities to us (brokers) and not even to mention FSB and compliance that our costs have escalated dramatically, but our commission structure has remained unchanged. If a person runs a business and his cost factor has increased (labour, material, rent etc), he increases his selling price to accommodate said increases and thus shows a profit each year. In our instance as brokers, we cannot increase our selling price (commission) if our costs increase because commission is regulated. So our profit margin has declined and that is definitely not sound business practice we are here to make a fair profit and survive.

Now it is the big ho-ha in the media regarding our commission that needs to be revised in order for investors to obtain fair returns. NONSENSE! Insurance companies must restructure their costing and not support misgivings regarding our commission. These companies have ripped off investors al these years and now they are too sissy to admit it and rather also point a finger at brokers they suck! Insurance companies are too slack to admit that in the event of a policy cancellation not only do they charge the client for commission paid to broker (part of their cost), but also claws said commission back from the broker nothing else but enriching themselves. And this practise is acceptable to the industry because nobody has spoken out.

Why am I still a broker then? Because I love my job but hate what is going on behind the scenes. I sincerely wish some legal body could be found which genuinely looks after brokers and take on the insurance companies. IBC, LUASA, FSB all of them are in the same bed with the insurance companies so therefore I dont have any respect for any of them.

Maybe in the next life things would be rectified.