Network to offer home cover to brokers affected by loss of trail commission
Broker network CETA has launched a home cover aimed specifically at brokers affected by Paymentshield's decision to cease paying trail commissions.
CETA managing director David Quick said Paymentshield's withdrawal from trail commissions, the percentage paid annually on renewable cover, had angered brokers and opened an opportunity in the market for CETA.
"Brokers concerned about continuing to use Paymentshield are asking themselves the question, 'what next'," he said. "Will they cut commission payable, introduce minimum business levels or even just raise rates?"
In a statement, Paymentshield said it would halt paying trail commissions only to brokers not regulated by the FSA. Those brokers who opted out of FSA regulation, but were promised ongoing commission payments prior to GI day, will be left out in the cold.
Paymentshield said: "Intermediaries who are no longer regulated to sell general insurance will not be able to receive commission directly, but can transfer their business over to another regulated authority."
But CETA is offering the same level of commission as its competitor, 27.5%, to all agents selling its products, regardless of whether they are regulated in the UK.
AXA is to underwrite the CETA cover as well as Paymentshield.
Insurance Times understands the insurer is unhappy with the manner in which CETA has publicly committed to attacking Paymentshield.
Paymentshield's parent, Towergate, said it had an ongoing relationship with the insurer. A spokesman said: "Because of Towergate and AXA's size it is inevitable that we will end up competing in some areas."
CETA's home cover, AXA Protector, offers buildings cover of up to £350,000 and content of up to £50,000.
