Shane Ross (Independent)

In the days when I was a parasite, we charged far too much money for doing far too little, just like insurance brokers. Yet on every contract sent out, people were told how much we were ripping them off. People could at least see the amount paid on stamp duty, VAT and the brokers' commission. It also allowed them to complain. Insurance brokers are different types of parasites in that they are much better. Insurance brokers do not inform consumers how much they are charging and they get away with it. With so few complaints, that is the sort of parasite I would have liked to have been. It is indefensible, particularly with cosy payments from insurance companies to brokers, that large bills go out from insurance brokers that do not inform the person involved how much he or she is paying in commission.

It begs the question: what would happen if the brokers were not there? It is unarguable that, as commission would not have to be paid by the insurance companies, the cost to the consumer would be cheaper. Insurance brokers must justify what they are doing, but by refusing to let one know what one is being charged, they cannot do so. I had the recent experience where I telephoned the insurance company with which I have a policy for my house. I asked a number of questions which the company did not like. When I asked how much the insurance broker was getting out of the policy, the company told me to jump in a lake, as it was up to the broker to tell me. It was not its practice to give this information, yet all the company's business was done through brokers. The result is that the broker is a shield between insurance companies and the customer. Insurance companies are not accountable on this matter. The insurance broker does not seem to be accountable for anything either but if one turns to the company it refers one back to the broker although it is receiving the main and final benefit. This is a pretty rotten industry which has lived behind closed doors for a long time.

Almost all insurance brokers earn their money from percentages, not from fee-based commissions with the result that their incomes have rocketed as premiums rose, particularly in the house price boom. They are doing just as much or as little work as they ever did yet are benefiting by the increase in value of the assets and the penal premiums and doing nothing extra to earn that, which cannot be justified. I query whether it is right that auctioneers, stockbrokers, lawyers and insurance brokers should be paid on the basis of percentage commissions. The report highlights the fact that because insurance brokers benefit from commissions it is in their interests to see that premiums are high. How can they act in the interest of the customer if they receive money for a higher premium? It might be €10,000 or €20,000 for employer's liability, €1,000 or €2,000 for a house, or the value of car insurance. The higher the value of the commodity, the higher the premium and the higher the insurance broker's percentage. There is very little to stop an insurance broker who might be greedy and unscrupulous negotiating a high premium for the client. People who shop around can nearly always find a lower quote than that offered by the insurance broker, which reflects inertia on the part of the customer and a certain laziness on the part of the insurance broker.

I am very concerned about up-front fees. Many of us have had experience of an insurance broker, particularly one selling life or unit-based assurance, taking an up-front fee. Sometimes this is the whole of the first year's premium after which the broker receives a small amount ad infinitum so the effort goes into selling the package but not servicing it. The broker's only interest is a once-off sting of the consumer for which he or she receives a large commission but will not look after the customer afterwards. The Competition Authority should examine and make recommendations on that practice. The signs are that the Government will drag its heels on this but I look forward to it giving an active response to the report's findings, to making life easier for the consumer and much hotter for insurance brokers.