We’re making insurance right. How does Sherpa offer commission-free insurance?

Written on
November 5, 2018

The insurance industry has been based on a commission model for decades. What this means is that for every policy sold, intermediaries take a cut of premiums. The more you spend on insurance, the more money they make. Amazingly, this can be as much as 30p in every £1 you spend.

When we started Sherpa, we wanted to improve the whole experience of buying and managing insurance.  This meant we had to change the way insurance is actually sold, and how we make money. We looked at what would be the most fair way for Sherpa members to get insurance. Every debate always led to a few guiding principles.

  1. Transparent. We want our members to know the cost of being a member, before they buy, with no hidden fees.
  2. Aligned.  We want you to know that what you pay us is not dependent on what insurance you buy, or how much you buy.  That way you can trust the advice we give you on what you need.
  3. Lifetime.  We want you to want to be a member forever.  So a flat monthly subscription means that we have to keep working to show you the value we add.  We can’t rest on our laurels.  Unlike commissions, which are paid on a sale (and then you are forgotten).

After agreeing on the three principles, we worked with reputable industry players, like GenRe, to develop a commission-free model that meets all requirements. We cut out middlemen, we reduced fees where possible, and worked hard with our partners to get the best value possible.

The result could be savings of around 20-40% on like-for-like cover through a broker.

While this is an excellent start, we are not stopping there. We want our members to have a broad range of protection that is commission-free.

This is just the first step.

Simon Azzopardi
Head of Product
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