Hollard has again cut broker commissions on home cover and other personal lines sold on the Steadfast Client Trading Platform – stirring fears other insurers will follow suit and domestic products may soon become unviable in the intermediated space.

From July 1, the maximum commission for Hollard home, landlord and private motor products on the SCTP will be 10%, the insurer told broking partners yesterday. The rate applies to new business and renewals.

Hollard last reduced broker commissions for personal lines distributed via the Steadfast platform in December 2023, to 15%.  

Its head of intermediated for Australia and New Zealand Stuart Byars said in an email to brokers: “In calendar year 2024, Hollard Personal Insurance paid out over $94 million in claims across our Steadfast home, landlord and motor portfolios, resulting in the overall performance of these portfolios remaining above our loss ratio targets.

“We have been monitoring these portfolios closely, and reviewing our risk appetite, and have determined that changes to commission rates need to be made to allow for the continued sustainability of these products.”

He said Hollard’s commitment to brokers “is as strong as ever”, adding: “We have a range of initiatives in progress to improve the profitability of these portfolios, including our recently launched faster claims process, which allows for the speedy processing of claims valued at $10,000 or less when lodged via the Hollard Broker Portal.”

Hollard's personal insurance products distributed by brokers are exclusive to Steadfast.
 
A spokesperson for Hollard told insuranceNEWS.com.au the company “has been a proud strategic partner of Steadfast for many years and remains committed to the broker market”.
 
The spokesperson says the Steadfast portfolios “have been impacted by increased natural perils activity and claims inflation costs. These cost increases are being experienced across the insurance industry and amid ongoing cost of living pressures for customers".
 
The spokesperson adds: “The broker channel remains a key part of Hollard’s business strategy and as such, it was very important to have commissions set at a rate that allowed for the continued sustainability of these products for brokers and customers.”
 
Hollard also completed a review of Steadfast commercial broker products and has not changed those commissions, the spokesperson says.

Brokers contacted by insuranceNEWS.com.au say they are bracing for other insurers to follow Hollard, and they fear for the future of personal lines in the broking space.

“If history is anything to go by, I would imagine other insurers will unfortunately follow suit,” Victoria-based Roderick Insurance Brokers sales manager Paul Codd said.

When Hollard last cut commissions, insurers including IAG-owned CGU, QBE and Allianz made similar changes, as did underwriting agency Blue Zebra.

A spokesperson for IAG says the group currently has no intention of changing broker commissions, and insuranceNEWS.com.au understands Blue Zebra is not reviewing arrangements.

QBE says it “regularly reviews broker commissions across all products, including personal lines, to ensure they reflect market conditions. We greatly value the relationship we have with our broker partners.”

Mr Codd says Hollard’s announcement does not bode well for the future of home and other personal lines in the intermediated space.

“We have seen commission rates drop over the past couple of years,” he said. “But we certainly weren’t expecting such a significant drop to just 10%.”

The reduction comes before the July 10 introduction of a rule requiring brokers giving personal advice to retail clients to obtain permission to be paid commissions.

“It’s difficult to see whether domestic insurance products will be viable going forward,” Mr Codd said. “It’s becoming resource-intensive to arrange domestic policies with significant compliance requirements, so that does bring into question whether it’s worth providing domestic insurance to our customers going forward.”

Good Cover principal broker Matt Williamson says he is “irked” by the Hollard commission changes.

While he has moved to a mostly fee-based model, he says the announcement underscores the need for the industry to review how home and other personal lines products are priced in the direct and broking channels.

“It shouldn’t be that we’re getting overly ‘expensive’ products in the broker market and we’re getting blamed for all the problems of the world,” he told insuranceNEWS.com.au. “The product is the same product. If we take the commissions away, the net of commission premiums for houses for brokers is still manifestly more than the direct market. That’s not right. What’s happening is brokers are effectively funding insurers’ direct market play. It’s not OK.”

Mr Williamson says a broker will now receive $200 for arranging a Hollard home insurance policy with an annual premium of $2000.

“[Hollard] needs to take a long, hard look at themselves if they think the service we provide is only worth $200. Bear in mind that if Hollard is not distributing via brokers, then they’ve got to have a contact centre, they’ve got to answer the phone calls, they’ve got to deal with the claims, they’ve got to train the staff ... All of those things are as true for the insurer as for the broker."

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