Your first question is probably not why use an insurance broker but what is an insurance broker? An insurance broker acts as a link between insurance companies and on your behalf as the client.
An insurance broker is not tied to an insurer which is the case for an insurance agent, who represents only the insurer(s) they act for. An insurance brokers’ profession requires them to act on your behalf and to identify your requirements to be in a position to scan/peruse the market to find a product or more that will suit your needs.
Why Insure with an Insurance Broker?
Impartiality: An Insurance Broker is not biassed towards or against any particular provider and will, therefore, pick the best option for their client, every time
Relationship: An Insurance Broker is interested in building customer loyalty and long term relationships with his / her clients. They will spend time getting to know and understand their clients in order to provide long term satisfaction and service.
Claims Service: In this most important area of all which deals with the key reason for the purchase of the product in the first instance, an Insurance Broker will guide the Customer through the claims process and effectively manage the claim on the client’s behalf, taking away the burden and stress of claims handling from the Consumer.
Best Price: An Insurance Broker will provide the best price for the appropriate cover from the best provider, every time. Value for money comes down to more than price when picking an insurance provider and while the broker may well get the lowest price, their focus will be on true value for money i.e. benefits to the client.
Choice: An Insurance Broker has full access to the insurance marketplace and can, therefore, offer consumer choice – a one-stop-shop if you like.
Professional Advice: An Insurance Broker will offer a consumer a Statement of Suitability document outlining all the options available to him/her and the reason why they are recommending one particular policy over another.
Simplicity: An Insurance Broker communicates in layman’s language i.e. insurance by nature, is a jargon-filled world and confusing
for many. By dealing with an Insurance Broker you will clearly understand all the risks that exist and the choices available to you to reduce or eliminate these risks. Many Insurance Brokers have been in the business for years and have built up experience of how to communicate in this way, making it easier for a client to make decisions on what’s best for him/her.
Market Service Standards: An Insurance Broker has access to a variety of Insurer’s products and knows the service levels of each Insurer in his/her market. As such, they can compare the various product offerings, services standards and can advise on the best service provider, best cover at the best rate from the most suitable provider, every time.
Why not to insure with a bank, insurance company or building society
Cannot offer Impartiality: A Direct operation can only offer their product range and service and so are biased in their approach. The client takes 100% responsibility for their own coverage decisions and for any mistakes they make as a result.
Cannot offer a Personal Relationship: In most cases, clients will be dealing with a different person every time they contact a Direct operation through a Call Centre. As a result, no personal relationship or loyalty is built up or maintained over time.
Claims Self Service: When dealing with a Direct operation a customer must handle the claims process themselves, a process that often leaves clients bewildered and confused and at a disadvantage to negotiate settlements and conflicts that may arise.
Single Price Only: A Direct operation can only provide a single price for its own specific product, which may not be the best product choice for the client when all factors are considered.
Cannot offer Choice: A Direct operation can only offer their own particular product range which does not offer choice to the consumer.
Restricted Advice: A Direct operation can only provide a Statement of Suitability document on their own products and therefore only offer advice on that particular product or products.
A Direct Provider: The Direct provider often suffers from a high turnover of staff and as such often employs young staff. They may lack the communication skills to explain clearly and accurately the differences in their particular products and service. They may not take the time to ask enough questions to satisfy the concerns of clients because they (personally) may not be dealing with the same client again in the future.
Only their Service Standard available: A direct provider can only advise on their own products and as a result, the consumer is not getting a full picture of products available in the market. The consumer also totally depends on whatever service level the direct operator provides.
Why a broker gets paid a commission
A commission is a remuneration paid to brokers for the transaction and placement of business with the Insurance Company (i.e. the acquisition cost for Insurers). The activities undertaken by a broker to receive this remuneration would include:
- Proposing the risk to the Insurance Company.
- Assisting the Insurer with any information required by them in relation to the risk.
- Incepting the policy and delivering all policy documentation on behalf of the Insurer to the consumer.
- Ensuring the consumer is notified and advised on renewal of the policy on behalf of the Insurance Company.
- Collecting the premium on behalf of the insurance company.
- Handling the premium in a designated client premium account for onward transmission to Insurance Company.
- Ensuring the staff are qualified in accordance with legislation to advice on the Insurance company’s products.
- Bearing all compliance and administration costs associated with transacting the business on the Insurance Company’s behalf.
- Assimilating the costs of implementing I.T. and security requirements from Insurers to ensure that all online products are safely transacted on the consumer’s behalf.
Why a broker would charge a fee
A fee is a remuneration paid to the broker by the consumer for services, unrelated to the transaction of placing the business with the Insurance provider, in relation to:
- Researching the insurance marketplace on behalf of the consumer and providing the best advice on available products and covers.
- Recommending, given their insurance knowledge and expertise, the best product to suit the consumer’s needs as outlined and aligning their budget where there is a financial constraint.
- Explaining the terms/conditions/warranties etc. included in a policy.
- Handling Mid- Term Alterations to existing policies and following through with Insurance Companies to ensure the MTA’s are implemented.
- In the event of a claim, assisting the consumer in the handling of the claim and bringing the claim to a satisfactory outcome for the consumer assuming the risk is covered under the policy and all conditions etc have been adhered to by the policyholder.
- Furnishing consumers with duplicate documentation where required or requested.
- Assisting with any complaints the consumer might have in relation to service or product.
- Complying with the cost of significant regulatory directives from the Central Bank.
So you know now why use an insurance broker
We hope that this blog post was helpful and explained any queries you may have had. Talk to us today if you have any questions regarding any of your insurance policies, please fill out this form or call us on 051 872 080.
This post was created from content kindly provided by Brokers Ireland