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Should I Use An Insurance Broker Or Go Direct?

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What’s The Difference?

A general insurance company can be considered as the manufacturer of insurance. New Zealand insurers design the insurance product, provide the financial backing and enter into the contract. They do this by underwriting the business insurance policy for a customer. This includes how much to charge and what level or amount of cover to provide. The insurer also handles any insurance claims related to those policies.

Insurance brokers act as the ‘middle-men’ in the transaction between the insurance company and the customer. Insurance broking is effectively the resale of an insurance company’s products. For very large clients they provide risk management advice and research analysis and will recommend the most suitable general insurance products and services. They will usually charge a fee for this financial service advice.

For small business insurance owners and sole traders, an insurance broker or financial adviser running an insurance business, will often resell one small business insurance product only. They will do so on behalf of one general insurance company or they may sell one product on behalf of a consortium of New Zealand insurers and overseas insurers. In this case, insurance brokers are acting on behalf of the insurer. In other words, he is an agent of the insurer and not acting as an agent for you, the small business insurance customer. As such, an insurance business in New Zealand is unlikely to provide tailored or specific risk management advice. They will provide an insurance quote from only one general insurance company – the insurer for which they are an agent. So, for New Zealand’s small businesses, the question comes down to “insurance agent or insurer”?


The Pros And Cons

By going directly to New Zealand insurers your quote and queries will be handled by their call centres. Each time you contact their insurance business you will get a different person handling your call. Most of these call centres are not open on weekdays - only during business hours. It means you will not be able to get products and services when it suits you. For most small business owners and sole traders , evenings and weekends are the best times to do this, but you will find Many New Zealand insurers closed at those times too. When you lodge an insurance claim directly with an insurer, it will be you fighting on your own to get your claim paid fairly and quickly.

Products sold directly by insurers are often a lesser version than that sold through insurance brokers and insurance agents, with narrower coverage and fewer options. If you have no knowledge of insurance broking, or lack the time to do a price and product comparison, it may become quite technical to manage. When it comes to claims, it may become difficult due to the lack of technical and expert support on your side, and the insurance company’s wish to keep claim costs to a minimum.

If you purchase insurance through an insurance broker or financial adviser you will find that the insurance broker will maintain your insurance portfolio. While that sounds good, it removes control from the small business owner and puts control in the hands of the insurance broker. You will often find that insurance brokers will take a week to provide a quote – we know, because we have tested the market.

Insurance brokers will also collect commission and a policy fee for arranging and renewing your insurance. For small business policies, commission can reach 30% of the premiums paid by the small business owner and a policy fee of $100 or more. They may charge for making changes to policies and for providing certificates of insurance to small business owners. An insurance broker will usually help with lodging claims and following-up on progress.


The Best Of Both Worlds

Insure Online complies with New Zealand's financial services legislation and provide insurance products online from reliable and financially secure insurance companies. We offer unbeatable value in time, cost, support and ease of buying great insurance products.

Our online platform allows small business owners to purchase, change and renew their insurance at any time.

Read more about what an insurance brok