Time and again, we experience surprising reactions in our customers when they realise that our service as an insurance broker does not cause any additional costs. For this reason, we would like to dedicate today’s blog article to the subject of compensation. Find out how much we actually earn and what we do for you.
Reading time: approx. 5 minutes
What do I actually get for my money?
We are not one of the consultants who sell the insurance policy once and then never appear again. We want to earn our compensation honestly and therefore we offer you extensive services. These include, among others:
- Extensive risk analysis of your personal and financial situation
- Check your existing insurance contracts for quality, completeness and value for money
- Complete processing of all insurance applications
- Regular review of your existing contracts
- Correspondence with all insurance companies including relocation reports, changes to bank details, etc.
- Claim notification and far-reaching assistance in the event of a claim
- Manage your insurance contracts and digital customer´s portal
As a TBO customer, you almost never have to communicate with your insurer. We take care of your concerns and remove the annoying correspondence with insurance companies. This saves you a lot of time and spares your nerves. Since you can contact us conveniently by phone, mail or whatsapp, your effort is reduced enormously.
How does compensation affect my insurance premiums?
Not at all. In insurance products usually a commission is calculated. If you use a consultant (for example, an insurance broker such as TBO), he will receive the commission. When you appoint an insurance agent, he and the insurance company will share the commission. Instead, if you buy your insure policy through the insurance company’s website, the insurer will be pleased to have a higher profit as he can keep the commission. Ultimately, however, the insurance product always costs you the same amount.
By the way: If you use a comparison portal (eg Check24), you also hire an insurance broker (in fact, most portals are registered as insurance brokers). Then the portal receives the commission from the insurer, but you forego most of the benefits listed above.
What do you earn from me?
As described, we receive from the insurance companies a commission for the brokering and care of your insurance contracts. Since we generate the majority of our income from composite insurance (such as liability, home contents, property or car insurance), we would like to explain the system with this example.
The insurer calculates the necessary contribution for your risk in order to pay for the damage, its staff and its profits. Based on this contribution (for example 100 €) the commission will be charged. This is mainly dependent on the product and is on average at 20%. The offer price of the insurance is then 120 €. Then the insurance tax (usually 19%) is charged, so you pay 142,80 € in our example.
(Actually, the calculation is not that easy, but we do not want to unnecessarily complicate it here.)
We receive our commission as long as you are our customer. It does not matter if we have sold the contract ourselves or not. This has two decisive advantages for you:
- Only if you are our customer, we also earn money with you. Thatswhy, we are naturally motivated to satisfy you as a customer and therefore we give our best every day.
- We have no reason to terminate existing contracts that you may have previously signed with another consultant or on the Internet. So we can give you an honest assessment of your existing insurance contracts, regardless of financial interests. “Cancelling existing policys at any price” is not our business.
High commissions on life and health insurance
The so-called insurance guy, who earned by high commissions for life and health insurance his sports car and the golden clock, is always topic in the media.
We also see the machinations in our industry quite critical and find the commission level often inappropriate, especially in the field of pension products. For us it is important that you know the cost of the products and also tell you the amount of our commission. You should know our price and thus also estimate, which incentive we pursue in the context of our product recommendation.
Costs play an important role, especially for pension products, as interest rates have become increasingly smaller in recent years. It is often better for you to pay us a fee for our advice and then to receive a commission-free product from us or to use directly the savings plan offer of a direct bank. Please also read the next paragraph.
Incidentally, from our point of view, you will soon find out if you have a fair consultant in front of you, if you ask him about the product costs and the amount of the commission. If he gives open information without hesitation and can prove this in writing by means of the legally required product information sheet, that already says a lot of good about this consultant.
In our guide for parents (German), we have described the topic in more detail and backed up with concrete numbers.
Do alternative compensation models exist?
Even if we live on it, we are not entirely convinced by the current remuneration system. So there are always cases where we receive very little or no commission for a lot of work. On the other hand, it may also happen that we get a comparatively high remuneration for a relatively simple process. In the long run, such processes offset each other, but in some cases the commission system can lead to injustice.
For this reason, we are increasingly using fees as an alternative to commissions. In these cases we renounce usually completely on the commission, which makes your product accordingly cheaper. In return, we will charge you a previously agreed fee. The fee is mostly much lower than the commission, so this way is usually the cheaper for you. The advice on fee currently brings two disadvantages:
- So far only a few tariffs are offered on a fee basis. In the case of life, pension and occupational disability insurance, although the product selection is now quite neat, there are already considerably fewer fee-based products in the area of composite insurance, and almost no tariffs exist in the field of health insurance.
- Even if our fee is much cheaper than a commission (sometimes up to 90% savings for you), some customers prefer to pay a (too) high commission over the monthly contributions instead of a fair fee at the beginning of the contract. Here we see ourselves as obliged to do even more educational work, because especially in life and pension insurance, the contract costs have not yet arrived in the consciousness of many.
It is important for us to emphasize that the collection of a fee is always discussed in detail with you in advance, so you will not experience any surprises.
We are grateful for your recommendation
We know that not all consultants treat their insurance customers as fairly as we do. Time and again, we hear from new customers that they used to be forced to sign contracts, were left alone in the event of a claim, or that their consultant generally did not take care of them. Our aim is to have exclusively satisfied customers. For this we give our best every day.
We are very happy about your recommendation, which we reward with a shopping voucher of about 35 Euro. Here we would like to emphasize that there are no customers for us who are “too small” or “not worthwhile”. We believe everyone deserves fair advice. In order for the cooperation to be equally enjoyable for the client and the consultant, we only require trust and the motivation to regulate your own insurance issues. Then it does not matter to us whether your recommendation is a manager, apprentice or pensioner.
You want to know more about our compensation? Feel free to contact us.
©Picture: yamix – stock.adobe.com