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Should I Use An Insurance Broker Or Go Direct?

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What’s The Difference?

An insurance company can be considered as the manufacturer of insurance. They 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 you’re covered for. The insurer also handles any claims related to those policies.

An insurance broker acts as the ‘middle-man’ in the transaction between the insurance company and the customer. They are effectively the reseller of an insurance company’s products. For very large clients they provide advice and research analysis and will recommend the most suitable cover product. They will usually charge a fee for this advice.

For small business insurance customers, an insurance broker will often resell one small business insurance product only. They will do so on behalf of one insurer or they may sell one product on behalf of a consortium of insurers. In this case, the insurance broker is 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 agent in New Zealand is unlikely to provide tailored or specific advice. They will provide an insurance quote from only one insurer – 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 an insurer your quote and queries will be handled by their large call centres. Each time you contact the insurer 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 service when it suits you. For most small business owners, evenings and weekends are the best times to do this, but you will find insurers closed at those times too. When you lodge a 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, with narrower coverage and fewer options. If you have no knowledge of insurance, or lack the time to do a market comparison, it may become quite technical to the everyday small business owner to manage on their own. 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 any claim cost to a minimum.

If you purchase insurance through an insurance broker 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 also 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, though it doesn’t avoid your need to follow up on your broker.


The Best Of Both Worlds

That’s where Insure Online comes in. We provide insurance products online from reliable and financially secure insurance companies in the market. We offer unbeatable value in time, cost, support and ease of buying great insurance for your small business. The products we sell online are on par with those sold by traditional insurance brokers.

Our online platform allows small business owners to purchase, change and renew their business insurance at any time - when it suits you. Through our secure website, small business owners get control and ownership of their insurance portfolio. It doesn’t matter if your business is based in Auckland, Wellington, Christchurch or elsewhere in New Zealand. Quotes are instant and confirmation is immediate.