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Brokers upset after CGU wipes out commissions on crop

Rural brokers are alarmed after CGU confirmed it will cut commission on its crop product from 20% to zero from July 1.

Brokers say they weren’t given enough notice of the change, and they fear a similar approach could be adopted for other rural products in future.

CGU says crop is particularly exposed to the impact of severe weather events and cutting the commission was a “necessary step” to enable it to continue offering the cover.

“This is really unprecedented and it’s pretty short notice,” one NSW-based broker told

“I understand if they are not making money on it, but this is a bit of a kick in the guts for brokers. 

“They’ve got us over a barrel because it’s very hard to place this cover elsewhere. And if this is where it is starting, where will it end? Crop is a commodity product and it’s quite hard to charge the client a fee.” 

Another broker described it as a “huge decision”.  

“What’s next? Nil commission on farm packs?”

One broker said they’d been told CGU didn’t really want to be in the crop market but was worried about the “backlash” if they exited.

“Why didn't they come in and cut the commission in half or something? I thought [the short notice] was pretty rough.

“They may have lost money in the last couple of years, but this is short term thinking.”

CGU EGM Damien Gallagher says damaging weather events are becoming more frequent and severe across Australia.

“In a small portfolio like crop insurance, the impact of severe weather claims and increasing reinsurance expenses has a significant effect on the affordability of cover for customers,” he said.

“On top of that, crop is a seasonal product that has experienced capacity issues over recent years, with insurers typically offering capacity to the same brokers and shires.

“Providing a financially sustainable product is challenging. Removing the commission was a necessary step to help us continue to provide this product.” 

He says the decision was not made lightly and CGU understands the impact on its broker partners.

“We made the decision with customers in mind knowing that there is limited capacity in the market and a withdrawal by CGU would have downstream effects on customers who rely on this cover for their livelihoods.

“It is our strong desire to continue to offer this product for years to come.”

CBN Executive Manager Distribution Leigh Frost says the network “understands what CGU is trying to achieve and why” but adds that brokers are badly impacted.

“We agree it is imperative that [CGU] continues to provide capacity for the crop market,” he told

“However, the way in which this decision was communicated has made it very difficult and, in many cases, distressing for affected brokers.

“A greater lead time to enable brokers to prepare for this change was required. Unfortunately, that is not always achievable.”