What is an insurance broker and why should you use one

In an age where consumers are increasingly turning online for advice we take a look at the benefits and cost savings to be gained by using the expert services of an experienced insurance broker.

When you’re faced with finding any kind of insurance, be it travel, personal injury, car, or other, in this increasingly digitally-driven age it’s tempting to open up an Internet search browser and use an online price comparison site. After all, online insurance quotes are free, fast, and instantly available, in the majority of cases without having to pick up the phone and interact with an advisor.

But not everything in life should be rushed, and insurance is definitely one area where it pays to take your time and seek out independent advice before committing yourself financially.

This is precisely where an insurance broker with expertise in the insurance type you’re seeking can step in, take the reigns, and add value, not only in your search for a fitting product, but in securing you the best possible deal at the best possible price. In fact, engaging an insurance broker can save you the misfortune of investing your hard earned savings into a policy that fails to protect you or pay out in times of financial hardship, ill health, or loss.

What is an insurance broker?

An insurance broker is an independent insurance expert with advanced knowledge of the insurance marketplace and its scope of products. Their role is to help guide clients objectively towards the right insurance policy to suit their financial needs and lifestyle, by comparing the products on offer and finding the best level of cover available.

Paul Davies, a second generation insurance broker who has his own insurance advice business explains “Similar to the last point. We gather personal details, including financial information to give advice on what benefit amount you should consider and what potential gaps in risk from the information you have given. (Eg: you might have several mortgages including investment properties. If you died or were disabled, how much would be required to pay those mortgages, maybe not in full, so your family does not need to sell them in an event like that).

Ultimately an insurance broker’s purpose is to source a competitive premium (monthly or annual payment amount) for their client’s insurance, and ensure that the policy terms offer the client the protection they need.

As anyone who’s suffered an insurance claim denial will tell you, there’s nothing worse than discovering you’ve taken out an insurance policy with an exclusion that prevents you from filing a claim or receiving financial compensation when the time comes.

An insurance broker can help you avoid this common setback, by carefully reading the policy documentation on your behalf, and flagging any clauses that could lead to a conflict of interest down the line

So as long as I read the policy document carefully I can source insurance without the help of an insurance broker?

Insurance is a complex product with a variety of risk attached to it, so it’s highly advisable to consult with an expert insurance broker before committing to a policy, particularly if the insurance you need is unfamiliar to you.

Andy Jamieson of Advisr proffers “Insurance brokers operate for their clients. Helping clients to find the right insurance to match their needs. Going direct can be ok, but do you really know what risks you face and are you aware of the inclusions and exclusions that your policy might offer? It is more important to know you have the coverage you need than that you got a cheap price. Brokers can help you align your requirements to the right products that are available across the market.”

Policy documents are typically worded using legal terminology and advanced industry jargon that’s difficult for anyone not versed in the language of insurance day-to day to decipher. An insurance broker can help you make sense of what’s being offered, and ensure you understand any restrictions or requirements on your part. Ensuring you only purchase a policy from a legitimate company offering a suitable product at a price you can afford.

Andrew Calf of PB Supercar Hire states that “Brokers are essential in certain, if not all business related insurance products. In the self-drive supercar hire market a good broker is essential as underwriters are not allowed direct contact, and so the only way to ensure cover is via a broker with a good relationship with and underwriter. They will be able to secure better rates than a less connected competitor due to the amount of business they pass over. They will also know the market, products and services inside out. Brokers are not connected to the underwriters but do receive payments from them for placing business.”

What does an insurance broker do?

In essence, an insurance broker acts as the middleman between the individual seeking insurance and the multitude of global organisations offering it. It’s an insurance broker’s job to guide their client through the complex variety of products, prices, and providers on offer, to help him or her make a fully informed assessment about the policy type that’s best suited to their needs.

You could think of an insurance broker like a travel agent. Only instead of liaising with flight operators, hoteliers and tour guides to put together a bespoke holiday package at a competitive price, an insurance broker liaises with providers to negotiate adequate insurance cover for the best premium.

Does an insurance broker work for an insurance company?

No, insurance brokers are licenced individuals who are sometimes self-employed or often work for an independent FCA-regulated (Financial Conduct Authority) brokerage firm. Any interaction an insurance broker has with an insurance provider is purely in the scope of performing his or her job.

Can using an insurance broker get me a cheaper quote?

Absolutely.

An insurance broker isn’t only there to compare policies and make sure you understand what’s being offered. A broker’s knowledge of the insurance landscape and their industry connections are also why it’s worth appointing an insurance broker to act on your behalf when seeking out a first-time insurance policy or looking to better an existing quote.

Insurance brokers operating in the UK don’t only have access to the handful of blanket quotes and premiums offered across-the-board in online search engines. Insurance brokers also work to find you bespoke quotes that aren’t attainable on the open market, with providers who don’t advertise their products through third party comparison sites.

Plus, in addition to accessing a wider range of insurance premiums and products than those advertised online, insurance brokers can actually negotiate the policy price on your behalf. Securing you a better premium than that originally advertised, or which you yourself are offered by going directly to the provider.

Will using an insurance broker’s services cost me money?

Not necessarily. Insurance brokers typically get paid in one of two ways:

-    Either they get a small commission based on the value of the policy they sell (paid by the insurance provided to the broker or brokerage firm directly when your payment clears).

-    Or, they ask for a small nominal fee to cover their services (payable by the client).

Every broker will operate by one of the above two payment structures, and some fees-based brokers may require payment purely for using their services, regardless of whether you take out a policy they’ve recommended.

You can find out upfront, how, what (and by whom) a broker will be paid, so if this information isn’t immediately volunteered don’t be afraid to ask for it. It’s a broker’s job to be transparent and honest about any financial reward or incentive they may stand to gain by your business, or any monetary amount you as their client are expected to contribute for their time.

Why should I use an insurance broker?

Using an insurance broker instantly puts a third party buffer between you and the provider trying to sell you their product, so you never have to experience pressure to buy or a hard sell. Plus, your insurance broker does all the time-consuming legwork to find quotes and compare them. Saving you the agony of trawling through competitor websites, filling in the same information multiple times, or receiving sales calls from companies who’ve been sent your information through a price comparison search.

Not only does the broker do all the leg work but they’re of course specialists. Simply Insurance add that you should really look for an insurance broker if you have a very specific health issue or lifestyle situation, or you need a more complicated insurance product. Insurance can be a tricky thing if you are not in the know, therefore getting a specialist will certainly make the process easier and make you feel more assured.

Once the broker is satisfied he or she has found the best policies at the most competitive premiums, they’ll then present you with their findings, and answer any questions you might have objectively.

If after this conversation you decide to progress with a product at a premium your broker has secured, you won’t even need to fill out the application form yourself. A broker will take care of completing all the paperwork on your behalf, liaising directly with the insurer to get the cover set-up and ensuring that every box is checked, and all required information submitted.

Insurance brokers versus going direct

The personal service delivered by an insurance broker, together with the benefit of a better product at a lower rate, are just two of the arguments in favour of using a broker over applying for cover independently online.

In fact, with insurance sourced through a broker, if you ever do need to file a claim the broker who sold you the policy will handle the process for you – an added perk you definitely don’t get by going direct, or via a price comparison website.

To find out more about the insurance broker services we offer at Bluedrop Services visit https://www.bluedropservices.co.uk/.