Steadfast CEO Robert Kelly has reiterated his belief that a 10% commission on intermediated home insurance is “a pretty fair deal”.

As insuranceNEWS.com.au has reported, Hollard has informed brokers it will drop commissions on personal lines through the Steadfast Client Trading Platform from 15% to 10% from July 1.

Mr Kelly last week wrote to the network to explain the group’s “reluctant acknowledgement” of the change, but some brokers reacted angrily, saying 10% is not enough and that Steadfast is “out of touch” if it thinks it is.

In an interview with insuranceNEWS.com.au, Mr Kelly defended his position and Steadfast’s record of supporting brokers.

He says insurers are struggling to make money out of home insurance and the industry is now operating under an “umbrella” of consumerism as scrutiny of rising premiums and affordability issues ramps up.

“When you look at [Hollard’s] portfolio and their loss ratio, I don’t think this is a brave move, I think it’s essential for survival,” Mr Kelly said.

“For Hollard, instead of saying, ‘We’re not going to do it for insurance brokers any more,’ and to actually continue but say, ‘We can only pay 10% commission,’ it's a pretty fair deal from their point of view.

“It gives the consuming public a price which hopefully is economic enough to make the broker product competitive, and so they’ll still seek broker business, and on the other side of the coin, the insurers will try to get their [combined operating ratios] down to under 100%, so they can still be in that sector.”

Mr Kelly believes other insurers are encountering similar issues to Hollard.

“We’ve looked around the market, nobody’s doing well out of household insurance. Everybody seems to be in the same boat.

“It’s an interesting market. Just watch this space. I think the next few months will be very interesting.” 

See ANALYSIS.