Can insurance brokers compete with other brokers?

Isa Al

New Member
5
Hello,

I have a question regarding insurance brokers, sorry if it's silly, I am still new in this domain and really interested in knowing more as I am starting my internship in an insurance company.

I am wondering, can insurance brokers compete with each other by offering a lower premium? let's say the car insurance costs $1,000/year, and the broker earns a 20% commission. For example, can one broker offer the same plan for $900 so their revenue will be $100 instead of $200, but at the same time they can attract more customers? Or all the brokers should offer the same premium?

I know the commission could even differ from a broker to another, company to another, and country to another. But I am just asking in general, are such things common with insurance brokers to compete?
 
Hello,

I have a question regarding insurance brokers, sorry if it's silly, I am still new in this domain and really interested in knowing more as I am starting my internship in an insurance company.

I am wondering, can insurance brokers compete with each other by offering a lower premium? let's say the car insurance costs $1,000/year, and the broker earns a 20% commission. For example, can one broker offer the same plan for $900 so their revenue will be $100 instead of $200, but at the same time they can attract more customers? Or all the brokers should offer the same premium?

I know the commission could even differ from a broker to another, company to another, and country to another. But I am just asking in general, are such things common with insurance brokers to compete?

That is called rebating and is illegal in almost every state.
 
That is called rebating and is illegal in almost every state.
Oh, I get you. But how can brokers compete or attract customers then? if all will offer the same premium, and probably from the same insurance company?
 
Oh, I get you. But how can brokers compete or attract customers then? if all will offer the same premium, and probably from the same insurance company?

Not all brokers will be able to offer the same companies (it really depends on the insurance line).

At the end of the day, you're asking about prospecting and is by far the hardest part of the business.

Some network, some buy leads, some generate their own leads, some market online, some advertise, some only work referrals, etc., etc. etc.
 
Cutting or removing your commission is not rebating, as you are not giving money back to the client. So no, it is NOT rebating, so you are fine. If you were to hand the client the $100, then that is a different story all together, and that would be rebating.

Now, is this a good practice? As a rule, no.
 
Oh, I get you. But how can brokers compete or attract customers then? if all will offer the same premium, and probably from the same insurance company?

You have probably bought insurance before. How did your agent sell you? Same thing.

People are going to buy insurance from someone every single day. And we all have the same price and products. So you need to make it easy for them to know you exist and make yourself easy to buy insurance from. That's the simple explaination.
 
Cutting or removing your commission is not rebating, as you are not giving money back to the client. So no, it is NOT rebating, so you are fine. If you were to hand the client the $100, then that is a different story all together, and that would be rebating.

Now, is this a good practice? As a rule, no.
The example that the OP gave is illegal in NY and most other states. The only states I know that offer some flexibility with this are CA and FL.

Rebating, Insurance Law Section 2324
 
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