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It`s hardly surprising that a Consumer Federation of America research reveals that insurance firms which pay higher commissions to agents and brokers often have higher premiums.

Consumer Federation of America (CFA) also revealed that higher prices for vehicle insurance do not necessarily mean improved service for customers.

"This research confirms that customers have to shop very carefully for insurance," claimed J. Robert. "The good news is there are insurance companies that disburse minimal or no commissions, propose low autoinsurance prices and give very good customer service."

"However, we also found many insurance corporations in which high commissions translate into lofty charges, with no improvement in service quality," he said. "Great carinsurance rates and service could be found in case customers take the time in order to compare companies."

Findings

CFA (Consumer Federation of America) checked commission information from the 20 top writers of coverage for both private passenger online auto ins as well as homeowners coverage. This total commission information combined ordinary commissions and dependent commissions (paid after insurance policies are sold and depend on special sales or on profitability goals).

The report compared total commissions with cost, insurer profitability as well as service quality as measured by grievance information and consumer contentment indices. Consumer Federation of America found that:

1. Insurance firms having lower commissions tend to have lower charges. This is not always the case, so consumers must shop carefully.

2. There`s no proof that disbursing higher commissions to an agent or broker produces either improved service or higher consumer satisfaction. Actually, there appears to be no correlation between the quantity of commission paid and the quality of service provided.

3. Several insurers propose particularly very good deals. Other insurance companies have charges that are almost always high.

In less competitive businesses, some insurance firms might be enticed to attract market share by offering higher fees to agents or to brokers with higher costs and, sometimes, higher gains for the insurance provider. Credit coverage is one subject in which this sort of `reverse competition` is particularly frequent.

Advices for Customers

We propose six tips for customers when shopping for autos insurance:

1. Shop around! This research revealed that premium charges often ascend with commissions, though this is not all the time true. Consumers must be sure to receive quotes from several of the lowest monthly payment insurance companies, including the direct writers of insurance that normally don`t pay commissions.

2. Consumers do not need to pay more to get excellent service. Several of the insurers with the best service records have low costs and also low or no commissions. It is worthwhile to shop between the firms with the lowest prices and the highest consumer contentment/lowest complaint ratios.

3. To receive information regarding motors assurance on-line rates, review country price information guides. Nearly all the states have cost information guides. Usually, customers may download these guides from the country`s insurance department web-site.

4. For grievance information on insurance corporations, check in the National Association of Insurance Commissioners` Internet site, www.naic.org.

5. Be careful with going to only 1 agent or broker for online autos insur, even in case that insurance agent represents a number of insurance companies. Consumers should be aware that several producers representing more than 1 insurance provider could place the customer in a higher priced company which has larger commissions even if the customer qualifies for a lower price. States do not oblige insurance agents or brokers to place the applicant with the most excellent insurance plan for him.

6. Ask insurance agents and brokers the right questions:

Do you represent me or do you act for the insurance corporation you`re suggesting me to use?

What commission are you gaining compared to the price of the vehicle insurance policy you are offering I purchase?

Am I receiving the lowest cost among all the low cost car insurance companies that you represent for which I qualify?

What other online motor insure firms do I qualify for that you act for? What are the prices I would disburse at the other insurance firms and what fee would you receive with every company?

Do you own a contingency commission agreement with the insurer you`re recommending? Please completely explain that arrangement to me.

In case I have a claim, do you represent me or the insurer in the claim process? Is your recompense somehow connected to claims filed by me or other customers of yours?

Ask yourself a small number of easy to answer queries to conclude if you fully appreciate the fine points of the subject reviewed by this article, the points we have talked about along the course of the text above.