When it comes to buying an insurance policy, you have two choices: you can either go through a broker, or you can buy it directly through an insurance company. So is one option better than the other?
Here’s a round-up of the pros and cons of the two:
1 Cost vs value
These days most insurers let you buy insurance online, which means you can compare different insurance policies side by side fairly easily and cut out broker fees in the process. However, the danger with choosing your insurance based on cost alone is that cheap policies have high excesses and lots of restrictions, so you may not be covered when you claim.
A broker, on the other hand, can help you select insurance based on value as well as cost. Because brokers are professionally trained and accredited, they can help you find a policy that’s appropriate for your specific risk profile. Having said this, insurance companies have also become smarter at evaluating your risk profile, so they work harder at giving you a fair premium for your risk level.
Buying insurance directly means you have to buy the policy, administer it and do the claims process yourself. However, these days it’s fairly easy to do these things on the insurer’s website or through its call centre.
If you go through an insurance broker, you’ll need to set up an appointment with him/her to go through your choices and buy your policy. Although this may take time, brokers can also shop around on your behalf for comparative quotes. He/She will also help you through the claims process, and if your claim is rejected, he/she can help you contest it.
3 Peace of mind
If you go through an insurance broker, he/she will vet your current insurance policies, do a thorough needs analysis, identify any current gaps in cover and then recommend a product that suits your needs. He/She will also stay in regular contact with you to identify any changes in your circumstances that may alter your exposure to risk.
If you buy directly, you won’t have this level of expertise on hand. However, most insurer call centre agents have received training about the product they’re selling, and the advice they give is regulated by the Financial Advisory and Intermediary Services Act, 37 of 2002.
4 Quality of service
Insurance brokers need to be fully accredited by the Financial Services Board to give you advice. They also have to disclose all information (such as excesses and premiums) and are held accountable if you’re not advised correctly. On the other hand, if you buy insurance directly, you may not know the full extent of the costs and cover of a particular policy, which could cause complications further down the line.
5 Security of personal data
Generally, going through an insurance broker means your data is secure because you’ll sign an agreement with him/her beforehand. This is not the case if you buy insurance directly – often, insurers gain your information and contact you first rather than the other way around. However, insurers risk ruining their reputation by not securing your information, so they usually make an effort to do this. In addition, the Protection of Personal Information Act, 4 of 2013, helps ensure that your information is protected and handled with care.
There are pros and cons to both buying insurance through a broker and buying it directly. On the whole, brokers offer you their expertise and look at your individual needs, so you’re likely to get the right cover for your circumstances. While this may not be the case if you buy insurance directly, call centre agents are held accountable for the advice they give you. What’s more, buying insurance directly means you as the client are in charge of your buying experience, so you’re better able to compare different policies side by side.