What do brokers do?
Insurance brokers work with their clients to understand their risks, and to discuss how to use insurance to protect their assets and businesses. Brokers offer expert advice on the management and reduction of risk, and on the range of insurance products that are available.
They use their in-depth knowledge of risk and the insurance market to identify and arrange suitable insurance cover – both for businesses and individuals.
Brokers have an extensive knowledge of the range of insurance policies available in the market, and a network of industry contacts, allowing them to negotiate the best deals for their client’s individual needs. The same skills and networks are also used to help their clients resolve claims when they arise.
Why use a broker?
An insurance broker can save you time, money and worry. A broker can help you understand the cover you need, and can purchase that cover for you from the insurance market.
Often consumers and businesses will make a decision based purely on the lowest price – and that can backfire in the event of a claim if you find out you’re not adequately covered, or even not covered at all for the loss that occurred.
Whether it’s business, home or motor insurance, brokers provide advice and assistance to make sure you are properly protected. The advice is tailored to your needs.
What types of insurance do brokers offer?
According to the National Insurance Brokers Association (NIBA), brokers place almost half of all general insurance premiums in Australia – about $17 billion a year* – and are typically involved in helping arrange commercial insurance.
The most common types of insurance brokers arrange are business packages, commercial motor and professional indemnity.
However, nearly all brokerages also provide assistance for everyday types of insurance, such as home insurance and private motor insurance, for clients.
Does it cost more to use a broker?
Not necessarily. It can cost less because brokers have knowledge of the insurance market and can negotiate competitive premiums on your behalf.
A broker is obliged to advise you of the fees charged for the services provided to you, so there are no hidden costs. Fees should be set out in the Financial Services Guide, Product Disclosure Statement (PDS) or where a broker has provided you with personal financial advice, the fees and costs associated with their advice will be set out in your Statement of Advice.
Remember, not all insurance policies are the same. You might be able to get a cheaper policy elsewhere, but it may not provide the cover you need if something goes wrong.
What’s the difference between an insurance broker and an insurance company advisor?
Advisors representing a particular company provide guidance on that company’s insurance products.
Because brokers are usually not aligned to any one company, they can usually explore a range of products and services available on the market and offer you tailored advice.
Some brokers do work on behalf of insurers but they are obliged to inform you if this is the case.
What sort of questions should you ask your broker?
Like any business partnership you enter into, it’s important to choose a broker that is a good fit for you and one you feel you could develop a close and long-lasting business relationship with.
It’s good to find out:
- The broker’s qualifications
- The range of services
- Who would service your account
- Experience with your type of business
- The size of the broker’s typical client
- How they bill for the work
- References from satisfied clients
If you run a business, you might then ask the broker to make a presentation. At the presentation you should look for:
- Business compatibility
- Level of commitment
- How the brokerage proposes to solve your insurance problems
- The competitive advantages of that brokerage compared with any others you may be considering
Should you let your broker know if your circumstances change?
Yes, and straight away. New circumstances can have a great bearing on the risks you face, and these will need to be factored into your insurance requirements. Not doing so could result in your insurer reducing or refusing your claim.
You should also ask your broker to provide written confirmation that any changes have been passed on to your insurer.
Can your broker help you make a claim?
Yes. In many cases a broker can negotiate a settlement with the insurer on your behalf to swiftly get the best result for you, and to ensure your life gets back to normal as soon as possible.