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Why do insurance customers dislike the Broker?

The middleman (the Broker) is often times perceived as an unnecessary third party, and conventional wisdom dictates that a third party means additional cost and possibly mistakes. Is this true though? Lets find out.

Here Are 5 Reasons Why You Should Consider Using a Broker

Consumers generally think they benefit when they buy insurance direct from insurance companies but is it true? We put this to test and here’s what we found out.

What is important to insurance consumers?

In their order, these are the things consumers said matter to them:

  1. Cost
  2. Ease
  3. Speed
  4. Peace of mind
  5. Security of their information

So let’s now analyze these items and decide how each performs when insurance is bought directly from the insurer and when it is bought through a broker.

Cost – Contrary to what you may believe, the broker will give the consumer the same or often a better insurance rates than the insurer would give and here’s why. Insurers often give better premium rates to brokers because the risk is lower for the insurer when the consumer buys from a broker. You see, brokers are professionals. They are trained to assess risk and recommend the right coverage and policy for their customers. To the insurer, this means fewer  claims resulting from under insurance while maintaining the correct premium income. For this reason ‘cutting out the middle man’ does not save you money. In fact it might cost you! Remember that the broker’s services to you are free.

Ease – It is never easy to buy a product as complex as insurance. – you either totally understand what you need or else you’ll need a broker to guide you. Buying insurance direct from an insurer can be likened to going before a judge without a lawyer. The broking function in an insurance transaction is all about you the consumer. The broker’s primary obligation is to protect the consumer by assessing potential risk and then offering advice. They understand the products that are available on the market and are very well positioned to advise the consumer on what’s best for him/her and where to get it cost effectively. A good broker will understand your needs better than you do.

In the event of an accident or lose, this is when the consumer needs the broker the most – he’s the lawyer representing the consumer during the claims process. It is his job to ensure that the insurer treats the consumer fairly – That’s what gives the consumer true peace of mind.

Speed – Sometimes it’s better to get it right than to get it fast. Whereas the consumer can get a quote and cover within a reasonable time direct from the insurer, it might help to know that most insurers that sell direct use call centers that are staffed by agents with little or no real insurance knowledge. How can you be sure that in the event of a claim you won’t be left high and dry because of a mistake that was made by these agents?

That’s not say that broker’s turnaround period is longer – to the contrary! Most large brokers will serve you within the same period as the insurer. Further there are online platforms such as Bima Exchange which is powered by Aon Kenya (a broker) that will show the consumer over a dozen quotes from multiple pre-vetted insurers in seconds and if the consumer decides to buy their policy online, they can be done in as little as 10 minutes and get their cover the same day.

Peace of mind that everything is covered – Here, the broker shines. They are largely far more efficient at cross-checking policies than the consumer can and they will educate the consumer by explaining the types of cover that are available and answering any queries the consumer may have.

Yes, direct insurers are marginally better these days than in the past but they’ll let you do the work and fill out the forms yourself. After all they are too busy running their big organizations, worrying about the claims and claim process and their bottom line to compete with the level of service provided by smaller more agile brokers. The good direct insurers center their operations on covering the low risk policies, possibly leaving the consumer exposed to higher risk aspects of cover.

Security of personal data – This was a difficult one to test, and falls largely to the technical team. However it could be assumed that due to the size of their operations, insurers may follow security guidelines that are marginally better than brokers. Having said so, advances in security software and Internet protocols have leveled the field quite a bit in this regard. For this reason the process of securing personal data may be much the same for both the insurers and the broker, but the trust conveyed by brokers is better.

Summary

The general perception by consumers that ‘going direct is better’ for the consumers and the conventional wisdom that “cutting out the middleman is cheaper” are both false. In the complex world of insurance, things are never simple. We therefore strongly recommend that the consumer uses a broker. Let the broker shop for you, and you will likely reap dividend!

For information on comparing quote for your car, health, home or funeral insurance click here.

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