What’s the difference between an insurance broker and an insurance company advisor?
Advisors representing a particular company provide guidance on that company’s insurance products.
Because brokers are usually not aligned to any one company, they can usually explore a range of products and services available on the market and offer you tailored advice.
Some brokers do work on behalf of insurers but they are obliged to inform you if this is the case.
What sort of questions should you ask your broker?
Like any business partnership you enter into, it’s important to choose a broker that is a good fit for you and one you feel you could develop a close and long-lasting business relationship with.
It’s good to find out:
The broker’s qualifications
The range of services
Who would service your account
Experience with your type of business
The size of the broker’s typical client
How they bill for the work
References from satisfied clients
If you run a business, you might then ask the broker to make a presentation. At the presentation you should look for:
Business compatibility
Level of commitment
How the brokerage proposes to solve your insurance problems
The competitive advantages of that brokerage compared with any others you may be considering
Can a broker help you work out what risks you have?
Yes, particularly with regard to business insurance. Many brokers are skilled risk managers who can advise you on the risks you face, and how to manage them.
Insurance is just a part of the overall risk management strategy, in that it transfers risk to another party (the insurer) at an agreed premium. Having effective risk prevention and loss minimisation strategies may help reduce premium costs.
Should you let your broker know if your circumstances change?
Yes, and straight away. New circumstances can have a great bearing on the risks you face, and these will need to be factored into your insurance requirements. Not doing so could result in your insurer reducing or refusing your claim.
You should also ask your broker to provide written confirmation that any changes have been passed on to your insurer.
Can your broker help you make a claim?
Yes. In many cases a broker can negotiate a settlement with the insurer on your behalf to swiftly get the best result for you, and to ensure your life gets back to normal as soon as possible.
How will you know if a broker is qualified?
Brokers go through specific education and on-the-job training to earn their qualifications.
In particular, look for a broker who has earned their Qualified Practising Insurance Broker (QPIB) or Certified Insurance Professional (CIP) status. If in doubt, ask. Brokers will be happy to let you know of their qualifications and explain what it takes to attain them.
Brokers are required to show evidence of continued professional development each year to maintain their qualifications.
How can you be sure a broker will pass on your premiums?
There are mechanisms in place to protect consumers in the unlikely event that premiums are not passed on by a broker. In almost all cases, the customer will not be adversely affected should a claim arise under such circumstances.
What if you have a complaint about a broker?
All insurance brokerages in Australia must hold an Australian Financial Services (AFS) licence or be appointed as an authorised representative of an AFS licensee. Insurance brokers must comply with certain requirements under the Corporations Act 2001 (Cth), the Insurance Contracts Act 1984 (Cth), and the Insurance Brokers Code of Practice. The Australian Securities and Investments Commission ASIC) is the industry regulator that regulates the conduct of Australian Financial Services (AFS) licensees.
Brokers are required to be members of an authorised external dispute resolution scheme as a condition of their AFS licence. Generally, the Australian Financial Complaints Authority (AFCA) is the independent organisation that helps resolve complaints and problems between brokers and their clients. Brokers are bound by the decisions of AFCA.
Advisors representing a particular company provide guidance on that company’s insurance products.
Because brokers are usually not aligned to any one company, they can usually explore a range of products and services available on the market and offer you tailored advice.
Some brokers do work on behalf of insurers but they are obliged to inform you if this is the case.
What sort of questions should you ask your broker?
Like any business partnership you enter into, it’s important to choose a broker that is a good fit for you and one you feel you could develop a close and long-lasting business relationship with.
It’s good to find out:
The broker’s qualifications
The range of services
Who would service your account
Experience with your type of business
The size of the broker’s typical client
How they bill for the work
References from satisfied clients
If you run a business, you might then ask the broker to make a presentation. At the presentation you should look for:
Business compatibility
Level of commitment
How the brokerage proposes to solve your insurance problems
The competitive advantages of that brokerage compared with any others you may be considering
Can a broker help you work out what risks you have?
Yes, particularly with regard to business insurance. Many brokers are skilled risk managers who can advise you on the risks you face, and how to manage them.
Insurance is just a part of the overall risk management strategy, in that it transfers risk to another party (the insurer) at an agreed premium. Having effective risk prevention and loss minimisation strategies may help reduce premium costs.
Should you let your broker know if your circumstances change?
Yes, and straight away. New circumstances can have a great bearing on the risks you face, and these will need to be factored into your insurance requirements. Not doing so could result in your insurer reducing or refusing your claim.
You should also ask your broker to provide written confirmation that any changes have been passed on to your insurer.
Can your broker help you make a claim?
Yes. In many cases a broker can negotiate a settlement with the insurer on your behalf to swiftly get the best result for you, and to ensure your life gets back to normal as soon as possible.
How will you know if a broker is qualified?
Brokers go through specific education and on-the-job training to earn their qualifications.
In particular, look for a broker who has earned their Qualified Practising Insurance Broker (QPIB) or Certified Insurance Professional (CIP) status. If in doubt, ask. Brokers will be happy to let you know of their qualifications and explain what it takes to attain them.
Brokers are required to show evidence of continued professional development each year to maintain their qualifications.
How can you be sure a broker will pass on your premiums?
There are mechanisms in place to protect consumers in the unlikely event that premiums are not passed on by a broker. In almost all cases, the customer will not be adversely affected should a claim arise under such circumstances.
What if you have a complaint about a broker?
All insurance brokerages in Australia must hold an Australian Financial Services (AFS) licence or be appointed as an authorised representative of an AFS licensee. Insurance brokers must comply with certain requirements under the Corporations Act 2001 (Cth), the Insurance Contracts Act 1984 (Cth), and the Insurance Brokers Code of Practice. The Australian Securities and Investments Commission ASIC) is the industry regulator that regulates the conduct of Australian Financial Services (AFS) licensees.
Brokers are required to be members of an authorised external dispute resolution scheme as a condition of their AFS licence. Generally, the Australian Financial Complaints Authority (AFCA) is the independent organisation that helps resolve complaints and problems between brokers and their clients. Brokers are bound by the decisions of AFCA.
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