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‘An absolute farce’: brokers hit out as more insurers cut commissions 

IAG-owned CGU has moved to cut commissions on personal lines products and extended the measure to its standalone liability portfolios, and Allianz is doing the same with its home and landlord offerings.

Hollard has already reduced its home and landlord commission rates and QBE’s commission changes on home products sold via the Steadfast Client Trading Platform start tomorrow.

Insurers say the adjustments are necessary because of cost pressures and impacts from increased catastrophes. They say the cuts will allow them to continue offering affordable insurance to consumers, but brokers contacted by are concerned and frustrated.

“I feel like brokers are being penalised for the failings of many insurers that have neglected to invest in their claims and underwriting capabilities,” Victoria-based Roderick Insurance Brokers Sales Manager Paul Codd said.

“Home, landlords and other personal lines insurance make up a sizeable portion of many regional brokerages’ business. With the rising costs involved in servicing these products, along with an increasing compliance burden, it’s questionable whether this line of business remains profitable for many brokers.”

If brokers do pull out of personal lines, it may reduce competition and lead to worse outcomes for consumers, Mr Codd says.

CGU told broker partners this week that the standard commission for home and landlord policies will be set at 17.5% and standalone liability at 15%, effective from June 1 for new business, renewals and quotes. A broker from the Steadfast network says the current commission rate for home and landlord is about 22.5%.

“Over the past few years, inflationary pressures across our supply chain, severe weather events and increased reinsurance costs have impacted our premiums, and we continue to experience these challenges,” CGU EGM Damien Gallagher told “We believe these changes will help us to minimise future premium increases and ensure we continue to provide sustainable and affordable products into the future.”

One NSW broker told she is sceptical whether consumers will see savings.

“When CGU scrapped crop commissions, the rates went up,” she said. “I’m all for helping the customer, but this only seems to benefit the insurer.”

She accepts brokers have profited from the hard market of the past few years but is concerned about the commissions trend.

“We’re seeing [reductions] creep into more lines of business and where will it go next? I am worried. Every couple of weeks we seem to get one of these notes. I get that premiums have increased, but where does this end?”

Another broker in regional Victoria is similarly frustrated. “It’s an absolute farce and a joke for them to say they are reducing cost to provide end benefits to consumers,” he said.

He says the signs were there when CGU erased crop commissions last year, from 20% to zero, describing the move as “a tester”.

“I face the same inflationary pressures that the head of CGU or anyone else is facing. I don’t see them taking a pay cut. We’ve got plenty of bushfire claims now and we are helping our clients. I’d like to get the CEOs here and sit them in our office, watch what we do and say, ‘Hey, you are still comfortable cutting our commissions?’ ”

Allianz told brokers early this month that the maximum rate payable for its home and landlord insurance will be reduced to 17.5%, effective from May 4. understands the current rate is about 22.5%.

“You will still be able to reduce commission, but not increase it above 17.5%,” the Allianz notice to brokers says.

In a statement to, Allianz says it is conscious that the increase in weather events and claims frequency and severity, along with inflationary pressures, has significantly affected domestic property premiums.

“Ensuring that insurance is affordable is a top priority for Allianz, and we are dedicated to being a sustainable choice for our brokers and their clients,” it said. “In addition, a combination of regulatory changes, evolving consumer expectations and inflation ... regulatory bodies are increasingly emphasising transparency, value for service and urging insurers to align their compensation structures with end customer best interests.”

National Insurance Brokers Association CEO Phil Kewin says feedback from members is that the level of broker commission should be a matter for intermediaries and their clients.

“The feedback from brokers is simple, and that is there should be a mechanism whereby brokers and clients can choose the way the broker is remunerated, and how much the broker is paid,” he told

“[Insurers] reducing the commissions is effectively someone putting a mandatory cap on how much work the broker is required to do, and be remunerated for. I believe it should be up to the broker, and when brokers feel it is appropriate they do reduce the commission. There is a fallacy that it is just set and forget and the broker will take maximum commission. That is not always the case.

“The feedback is that it shouldn’t be up to the insurer to determine what is the maximum level of commission that should be payable on one particular line or product.”

Australian Risk Advisers MD Paul Murphy does not see a bright future for brokers in personal lines. 

“We have seen AIG and Chubb exit the market. We concentrate on business clients who want advice and help with claims,” he told

He says the relentless focus on “get a quote” and the current thinking that “you’re paying too much for insurance” ensures Australians think only of price when considering cover. “The direct insurers have made insurance a commodity.”