Follow the Money: Why Your Insurance Is Scattered Everywhere

I owned an insurance brokerage for 25 years, so I know exactly how the money flows. Every policy sold pays the seller twice: a commission worth roughly 10 to 20 percent of your premium, and then — at year-end — bonuses from the insurers for hitting volume, growth, and profitability targets with them.

Those bonuses have a formal name: contingent commissions. They're disclosed in the fine print nobody reads. And they mean the system doesn't just reward selling you insurance. It rewards selling you more of it, spread across the insurers where targets need hitting.

Once you see that, a lot of strange things about your insurance start making sense.

Why you have three auto policies for three cars

This is the one I see constantly. A household with three vehicles, each on its own separate auto policy — sometimes at different brokerages, sometimes renewing months apart.

Nobody sat down and designed it that way. Cars get bought at different times, and each one gets placed wherever was fastest that day. Each new policy pays a fresh commission. And here's the quiet part: nobody in that chain gets paid to consolidate.

Consolidation can actually reduce what the seller earns. Two cars on one policy with a multi-vehicle discount means a lower total premium — and commission is a percentage of premium. The person selling you insurance can earn less by making your insurance cost less. To add insult to injury, some brokers are paid a bonus for each new policy they write, that includes each time they unnecessarily re-market your insurance to a new company. They are actually incentivised to sell you separate policies. Sit with that for a minute.

Why your renewals arrive all year long

Same incentive, different symptom. Home policy renews in March. One car in June. The other car in October. Each renewal is its own transaction, its own commission, its own stack of paper.

Nobody looks at the whole picture because nobody is paid to look at the whole picture. Things overlap. Things lapse. Coverage drifts out of date a little more with every passing year, and nobody notices because each policy gets reviewed — if it gets reviewed — in isolation, eleven seconds before the renewal deadline.

What the scatter costs you

Add it up and the scattered program is expensive in ways that never show up on a single invoice:

• Missed discounts. Multi-vehicle and multi-line discounts are among the biggest savings available in personal insurance, and you only get them when policies sit together.

• Missed benefits. Combined programs come with advantages scattered ones don't — like a single deductible when one claim hits both your home and your car.

• Paperwork chaos. Four renewals, four sets of documents, four chances for something to slip.

• No real review. A proper insurance review looks at everything you own and everything that could go wrong, once a year. That can't happen when your program is in four places.

  
  

What to do about it

Pull it all together. Every policy with a single insurer, in the same office if you're using a brokerage. One relationship. Renewals you can actually track. Every discount you've earned, actually applied. And one annual review that covers the whole program instead of four rushed ones that each cover a corner of it. If your current setup can't tell you, in one sitting, what you own, what it's all costing, and where the gaps are — that's not a program. That's a pile.

Why I can tell you this

I used to sit on the other side of this desk. I know what the bonuses look like because I used to earn them. Now I earn nothing from your premiums. No commission per policy, no year-end bonus, no volume target with any insurer. When I tell you to consolidate everything with one insurer, it doesn't pay me a dollar — which is exactly why you can believe me. The industry's incentives built your scattered mess. Mine is the only one in the room that points the other way. If you want someone to look at the whole pile and tell you what it's actually costing you, start with a complimentary 30-minute assessment. I'll map every policy, find the discounts you're missing, and tell you what I'd consolidate — whether you hire me or not. What do you have to lose? Get your complimentary 30-minute assessment by clicking on https://www.jasperpic.com/book-online)

— Jeff Kristjanson, Jasper Private Insurance Consultants