ADVANTAGES OF THE SHORT TERM INSURANCE BROKER
When shopping for insurance policies you have two choices: you can either work through an Insurance Broker who represents a variety of Insurance Companies and their products or you can choose to make use of a Direct Insurer who cannot provide access to products or pricing outside their own company. Often an independent Insurance Broker can prove to be the better choice as they will negotiate with a number of companies to find the best deal for you.
If you buy your insurance from a Direct Insurer you’ll have to be content with speaking to a different Call Centre agent each time you have a query, which means that you will need to explain your specific circumstances every time you contact them. With most Insurance Brokers, on the other hand, a dedicated consultant will be assigned to you. Someone who has the training and flexibility to deliver an immediate and personalised service from the moment you make the first call.
EASIER AND QUICKER
If you use an independent Insurance Broker you will get multiple quotes and the Broker will advise you of your options to make a well-informed decision. You are likely to be asked more probing questions by a Broker, ensuring that you are correctly risk-rated and that the policy you choose is appropriate to your needs. This is in contrast to dealing with call-centre agents, who are required simply to "tick boxes", and with whom you can never build any sort of ongoing relationship.
A big drawback of going the direct route is that you will receive only one option as the product provider is the same party that advises you on what to buy. You may not be aware of other products that may have better solutions for your specific needs. If you end up making a wrong statement, it could backfire, with the insurer rejecting your claim. It is also in the broker’s interests that you understand and answer the questions correctly, both in terms of his legal obligations, which are prescribed by the Financial Advisory and Intermediary Services Act.
Despite what Direct Insurers may say in their advertising, it is not necessarily cheaper to cut out the middle man. Insurers that use Brokers pay ongoing commission on premiums, as opposed to Direct Insurers, who often pay Call-centre agents a commission. It may be difficult for you, the consumer, to compare quotes from insurers, because they may assess your risk differently, require different levels of excesses, and/or offer different “bells and whistles”, such as cash-back bonuses. This is an added reason for relying on the expertise of a broker in making a decision.
The broker must disclose to you all their commissions, remuneration and fees when you take out a policy.
It is what happens after you have been sold your policy, particularly when lodging a claim, that demonstrates the real value of a broker. An Insurance Broker should at all times be available to provide you with technical advice and help with the claims procedure and even conflict resolution should that becomes necessary. A good Broker combines technical and industry knowledge gained from years of experience to guide you and provides invaluable assistance in negotiating terms for policies and resolving claims.
SPECIALISTS AND GENERALISTS
Brokers are obliged to be registered as financial services providers with the Financial Services Board and must comply with the requirements of the FAIS Act. This addresses things such as disclosure, needs analysis and rights of recourse. Brokers receive ongoing professional education through regular conferences and workshops. Relationship managers from the insurance companies regularly call on brokers to keep them updated on development and latest products available.
WHAT IS REQUIRED OF YOUR BROKER
Your insurance broker must comply with the general code of conduct for financial services providers under the Financial Advisory and Intermediary Services Act.