Is it time to stop group risk insurance commission?

A controversial statement, given the current arguments by brokers to be paid more commission for the work they do.

The reason I say this is - too often employers are simply sold an insurance (or renewed) but are not advised and consulted each time about what the employer’s broader needs are, nor what the insurer’s broader offerings are.

This is not a simple car or travel insurance, and on the group side it is a highly complex offering.

I see good group risk insurers putting a lot of effort into offering add ons to insurance such as rehabilitation, counselling, second medical opinions, legal helplines and a whole raft of extras that could be highly valuable to HR, occupational health, benefits and reward departments.

But still, in far too many cases, employers remain oblivious to what is on offer, how these extra services could be useful to their particular needs and how to maximise the effectiveness of these services.

How often do we see the average employer paying for an extra wellbeing service already coming free with a group risk insurance? I’ve lost count.

Advisers, brokers and intermediaries are the chief interface between insurer and employer. Far too few appear to regularly remind their group clients of ALL the benefits that come with the insurance they have sold.

Of course there are great advisers (I have met many of them). The ones who truly put in the leg work up front, when the insurance is sold, to promote the ALL wellbeing services that come with the insurance, not just focus on the claims when they come in. But could they be in the minority? 

Just as the Retail Distribution Review (RDR) flushed out the churn, commission payout and re-churn practice in pensions, perhaps it is time to consider the same for group risk?

If a broker is earning £10,000s or £100,000s in commission for re-broking insurance for a large employer then that employer should be getting a fair chunk of that adviser's time each year.

Of course advisers, brokers and intermediaries will be anti this change. Would turkeys vote for Christmas? I doubt it. And perhaps insurers find the current state of play useful too.

But employers should be getting better services over and above rebroking and managing claims.

Group risk insurances are a hugely valuable benefit that no one seems to buy.

Transparency on payments and commissions could help this market greatly.

At the very least, employers will start demanding more bang for their buck and raise the benefits of group risk insurances.

Do you agree or disagree?

Do you believe brokers, intemediaries and advisers need to earn more to deliver more? Should that be in fees and/or commission?

Or is it employers which do not want to do more than tick the box that they have the insurance? Or act on the other benefits which come with group income protection?

Debi O'Donovan is founder of the Reward & Employee Benefits Association
Twitter: @debiodonovan