Rural brokers have continued to express disappointment at CGU’s decision to cut commissions on its crop cover from 20% to zero. 

As reported by insuranceNEWS.com.au on Monday, the decision will take effect from July 1. 

CGU says it’s a “necessary step” for it to keep offering the much-needed product, with viability threatened by a spate of recent natural catastrophes. The insurer also confirmed that it will cease offering livestock cover from September, because that offering was so rarely taken up by brokers and clients. 

Abbie Wilson, of National Insurance Brokers in Horsham, Victoria, told insuranceNEWS.com.au there are alternatives to cutting crop commissions to zero that could have been investigated. 

These could have included halving the commission to 10%, removing the reducing excess, and reducing sub limits for automatic policy benefits. 

“Decision makers … need to remember who keeps their crop product alive,” Ms Wilson said. 

“It is us the broker. The same brokers that must have these challenging discussions with clients. The same brokers who have discussed and explained CGU’s significant premium rate increases over the past years and continue to do so today. 

“CGU will never explain this to clients. This alone proves that all brokers deserve to be renumerated fairly.  

“No one goes to work every day and expects to work for free. This is exactly what CGU are asking us to do.” 

Ms Wilson has told clients she will seek alternative cover from other providers “as we do not believe it is a sustainable business practice to place any insurance policy for $0”. 

If clients opt to remain with CGU “an extra non-negotiable fee will be applied”, she says. 

Another Victorian broker says he generates about $40,000 in commissions from crop, with half of this coming from CGU. 

“A factor that has been missed is that CGU have advised us that WFI agents will retain their commissions as that is deemed profitable,” he said. 

“Clearly the hailstorms had inside knowledge and only targeted crops insured via brokers. 

“Concern is mounting that this may be giving [CGU] ideas on other products and also with the other majors taking note.” 

IAG, which owns both CGU and WFI, says the WFI agents model cannot be directly compared with the broker model. 

CGU EGM Damien Gallagher says the decision was not made lightly and the insurer understands the impact on its broker partners. 

“Providing a financially sustainable product is challenging. Removing the commission was a necessary step to help us continue to provide this product. 

“It is our strong desire to continue to offer this product for years to come.”