O’Callaghan Insurances act as intermediary (Broker) between the consumer, and the product provider with whom we place our client’s business. We are usually remunerated by way of commission and other payments from product producers on the completion of business. Our clients may choose to pay in full for our services as specified below by means of a fee. Where we receive recurring commission, this forms part of the remuneration for initial advice provided. We reserve the right to charge additional fees and will advise the client in writing prior to the fees being charged.
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The Background
Pursuant to provision 4.58A of the Central Bank of Ireland’s September 2019 Addendum to the Consumer Protection Code, all intermediaries, must make available in their public offices, or on their website if they have one, a summary of the details of all arrangements for any fee, commission, other reward or remuneration provided to the intermediary which it has agreed with its product producers.
What is Remuneration?
Remuneration is the payment earned by the intermediary for work undertaken on behalf of both the provider and the consumer. The amount of remuneration is generally directly related to the value of the products sold.
What is Commission?
Commission is payment that may be earned by an intermediary for work undertaken for both provider and consumer.
There are different types of remuneration and different commission models:
Single commission model: where payment is made to the intermediary shortly after the sale is completed and is based on a percentage of the premium paid/amount invested/amount borrowed.
Trail/Renewal commission model: Further payments at intervals are paid throughout the life span of the product.
Indemnity Commission
Indemnity commission is the term used to describe a commission payment made before the commission is deemed to be ‘earned’. Indemnity commission may be subject to a clawback (see below) if the consumer lapses or cancels the product before the commission is deemed to be earned.
Other forms of indemnity commission are advances of commission for future sales granted to intermediaries in order to assist with set up costs or business development.
General Insurance Products
General insurance products, such as motor, home, travel, health, commercial ,retail or liability insurance, are typically subject to a single or standard commission model, based on the amount of premium charged for the insurance product.
Partnership Arrangements
In some cases, we may be a party to a partnership arrangement with a product provider and will earn additional commission. Any business arranged with these product providers on a client’s behalf will be placed with the product provider because that product provider is at the time of placement, the most suitable to meet the client’s requirements, taking all the client’s relevant information, demands and needs into account.
Clawback
Clawback is an obligation on the intermediary to repay unearned commission. Commission can be paid directly after a contract is concluded but is not deemed to be ‘earned’ until after a specified period of time. If the consumer cancels or withdraws from the financial product within the specified time, the intermediary must return commission to the product producer.
Fees
In certain circumstances, it will be necessary to charge a fee for services provided. These are listed in our Terms of Business , on our website and in our non-life business procedures manuals. In other circumstances where fees are chargeable or where the client chooses to pay in full for our service by fee, we will notify the client in writing in advance and agree the scale of fees to be charged if different from fees outlined in our schedule of fees on our website.
If we receive commission from a product provider, this may be offset against the fee which we will charge the client. Where the commission is greater than the fee due, the commission will become the amount payable to the firm unless an arrangement to the contrary is made.