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Insurance Business | 11 Nov 2016, 09:00 AM Agree 0
With insurers looking to go direct, will there still be a place for brokers?
  • John | 11 Nov 2016, 12:54 PM Agree 0
    This takeover of intermediated insurance by Australian insurers is a smoke screen. There are lots of different reasons that people use brokers, most of these aren't going to change anytime soon. Direct insurers may pick some of the low hanging fruit but many people continue to wish to use brokers. .

    Risk advice isn't the only reason that people use brokers. Some people wish us to do work on their behalf that they don't have the time or inclination to undertake.
    There are also a great many moderate & higher risk activities that Australian insurers won't write. Therefore insured's have no choice but to use a broker whether they want to or not. This is not going to change unless insurers change their risk appetitie, which they are unlikely to do.

    In commercial insurance it also doesn't follow that cutting out the middleman is cheaper. For PL & PI, underwriting agencies, even with underwriter fees & broker fees, tend to be cheaper than direct offerings from Australian insurers anyway. Property insurance is different but again beyond an average business package the client is unable to fathom the policy & the insurer the risk.

    There are also people who want the best cover & claims results irrespective of paying a few dollars extra. Brokers have better quality wordings & claims outcomes.

    The other thing that the insurers don't allow for is that we perform admin on their behalf. The commission isn't pure profit for us & cost to them. There is an element of profit but we also perform work such as data entry, document issue & receipt & premium collection which saves them having to do it.

    The measures of people buying direct are also not accurate. For example, many brokers have online platforms to enable transactions. A client may confuse this as buying a policy direct when in fact it is a brokered policy.
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