Letter: A broker's life

Tim Wood
Saturday 11 May 1996 18:02 EDT
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The description of insurance brokers as useless parasitical middlemen made me a little sad ("Insurance?...", Business, 5 May). Someone has to do the broker's job of dealing with the public, collecting the money, advising on insurance products for people with more specialised requirements, providing local representation for the insurers (we don't all live in London) and so on.

For this service the broker gets the princely sum of 10 per cent of a typical motor premium. Allowing a generous allowance for the insurers to pay someone else to do these jobs of, say, 2.5 per cent of the premium, they could perhaps reduce their costs by 7.5 per cent.

Where is your suggested saving of the other 22.5 per cent going to come from? Can I suggest from their wasteful and palatial head offices, their antiquated attitudes to their broker partners who are trying to help them, their insistence on dealing with unregistered insurance sellers as well as properly registered and regulated brokers, their head-long rush into trying to ape each other's direct telephone operations, their reluctance to embrace proper use of the latest technology, their reluctance to promote anyone other than on the "Buggins's turn" principle, and so on.

Please don't run away with the idea that by abolishing the broker, all the insurer's problems will be solved. They won't.

Tim Wood

12398@aol.com

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