Within the intermediary market there is always discussion around the trend of insurance companies dealing direct with customers, so what are the benefits of engaging an insurance broker? And what does an insurance broker do for its retail customers?
Firstly we need to understand what the insurance broker does on a daily basis.
1. Discuss the nature of a customers business
2. Advise the customers on the insurance products that are typically purchased by that type of business
3. Negotiate with insurance markets to deliver competitive price and cover outcomes for the customer
4. Review and assist customers to lodge claims with insurers
Whilst I believe the retail customer has an understanding of points 1 & 2, less is understood or emphasis placed on points 3 & 4. The broker will utilise their expertise to advise on the available products in the market in points 1 & 2, but also scrutinize the insurance markets to ensure customers are receiving adequate cover for competitive pricing and hold insurers to account in the claims process.
How do brokers scrutinize insurance companies to ensure superior outcomes for customers?
1. Conduct reviews and comparisons of various insurance policies available in the market
2. Utilising volume bargaining power to conduct negotiations with insurers for lower pricing and superior cover
Steadfast insurance is an example of how insurance brokers have historically used bargaining power to deliver superior outcomes for customers. Originally formed by a group of brokers bandying together to collectively bargain with insurers for increased discounting and superior policy wordings.
What bargaining power does a retail customer have when dealing directly with an insurance company?
The answer: none
What expert ongoing scrutiny are insurers subject to by a single retail customer?
The answer: none
How can a customer be sure of the quality of product being provided by dealing directly with an insurance company?
The answer: they can’t
Only Steadfast insurance brokers have access to products such as the Steadfast business insurance policy wording underwritten by commonly known names as CGU, QBE, Allianz, and VERO. In this case you have a policy designed by a broker with superior cover for customers underwritten by the major insurance companies. If you deal directly with these big names you will no doubt receive an inferior product for around the same pricing.
In addition to product scrutiny, brokers will review and assist customers to lodge claims.
How does a broker assist in the lodgement of claims?
In your darkest hour it would surely be invaluable to have an industry expert on your side right?
Insurance brokers thoroughly understand the claims process from the appointment of industry experts to review the claim right through to settlement terms and regulatory governance such as settlement and dispute periods.
Let’s understand what an insurance company is, a large bureaucracy with in general many 1000’s of employees who’s aim is to sell as many insurance policies as possible and pay as few claims as possible. The net result? Increased profit for shareholders.
Whilst in Australia there is significant regulatory oversight including dispute resolution processes and protection for customers, the reality is customers often get stuck dealing with revolving door, call center style insurance companies who adhere to the bare minimum service time frames. If you get stuck dealing with a claims consultant who is having a bad day or on annual leave it can significantly delay your insurance claim.
Do you have time to follow up these people within insurance companies? Sit on hold for 20minutes whilst waiting for a claims consultant to tell you need to provide additional documentation, or they won’t be accepting the claim? Sounds like a nightmare right?
That’s where insurance brokers can help, you have an industry expert at your beck and call to advise and represent you to deal with the insurance companies.
Insurance brokers won’t be dealing with the call centres though. Unlike retail customers, as industry experts we have designated contact points to allow us to handle the process quickly and efficiently.
In conclusion, it is wise for retail customers to consult an insurance intermediary who will almost always provide superior cover at a competitive price. Buyer beware that insurance companies dealing directly with customers have all the power in the transaction and will use this power to deliver superior returns for shareholders.
Direct insurers that have a presence in the Australian retail market:
NRMA, SUNCORP, ALLIANZ, WFI, GIO, CGU, ELDERS, YOUI
Cheapest is almost always not the best or appropriate for your business.
Insuregroup is an authorised broker and a member of Steadfast insurance.
Insuregroup: experts in insurance