Brokers are free to cut their commissions on Vero personal insurance home cover by more than the required 7.5 percentage points, the insurer says.

Vero says the reduction from 22.5% to 15% will take effect on February 1, to help tackle cost pressures and maintain a competitive presence.

“Should you wish to nett or dial down the commission from 15%, this continues to be possible,” Broker Distribution National Manager Sam Sanfilippo says in a letter to brokers.

Home premiums, like other portfolios, will continue to be calculated on individual risk and variables such as claims and reinsurance costs, he says.

The possibility of brokers further cutting commissions was addressed after some asked about flexibility on the reduction, a Vero spokesman told insuranceNEWS.com.au.

Although flexibility was on the downside only, some brokers may want that option, he says.

“It wasn’t a major question, but it felt as though we should spell it out a bit more.”

Steadfast MD Robert Kelly has called the commission cut “extremely disappointing”, and has pointed out that most of Vero’s competitors have not cut their commission levels on personal lines products.

Mr Sanfilippo says the cut will aid the long-term sustainability of Vero’s home portfolio.

“The reality is the cost of distributing and maintaining these products is simply too high under the existing conditions. Increasing distribution costs are affecting our ability to maintain a competitive presence in a heavily commoditised market place.”