Getting insurance is easy and with the insurance market being so competitive there are different ways to obtain insurance, such as going direct or through a broker. The question is, which option do you choose? Both options offer multiple benefits and downfalls. Understanding the difference between the two will give you a better indication of which way to go. Let’s go through them!
Insurance Brokers vs. Direct: What is what?
Let’s start with understanding the terms ‘’ Broker ‘’ and ‘’ Direct’’.
The term ‘’ Direct ‘’ is just that, you go directly to the insurance carrier and bypass any middleman. Often there is a perception that direct carriers have lower premiums, however this is not always the case.
Insurance Brokers are trained and accredited individuals that advise people on their insurance needs through profiling and conduct a needs analysis. Brokers will act on behalf of the client and negotiate premiums with the insurance carriers.
Going Direct
Direct will most likely be conducted online by searching for insurance carriers. A computer system will process your information and generate a premium based on your risk profile, the more detailed information you give the more accurate your insurance quote will be. If going direct, ensure you understand the insurance lingo when answering questions such as terms like ‘’ uninterrupted insurance ‘’. If you don’t understand the questions you could incorrectly insure yourself which could leave you with no pay-out at claims stage.
Going direct will also have you administering your own policies, such as logging and sorting out your own claims and we all know how IVR’s can shove you from pillar to post within departments. However, once you’re speaking to a human in the right department the process is simple. Direct Insurance is more focused on premiums than that of a client’s needs.
Using a Broker
Brokers are known as the ‘’middleman‘’ as they act on behalf of a client with the insurance carriers. Not only will an insurance broker be able to quote on multiple carriers, they will also conduct a needs analysis with the client to determine the correct type of cover needed. Generally, insurance brokers are well versed in the industry and will be able to answer most questions pertaining to your policies, claims and annual reviews.
Any administration to be dealt with will be done by the broker and the carrier, leaving you to go about your day and have your broker do all the running around. All this great service does however come at a cost. Insurance Brokers will charge clients what they call a ‘’Broker Advise Fee‘’ which is billed monthly with your premium for all the above services and more. Broker Advice fees are relatively cheap and can range from R20 – R140 per month.
So, Broker or Direct?
Insuring direct may feel like it would be the logically cheaper option in that you’re cutting out the middleman but don’t forget that brokers represent many clients and negotiate better rates with insurers. Brokers are also more likely to be unbiased as they usually have a portfolio of carriers they can place clients with.
Being correctly insured is vitally important. Nobody would want to find themselves in a position where a claim is rejected that will most definitely leave you with financial issues. A Broker Advice fee is a small price to pay to have peace of mind that your assets are correctly insured.
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