UK insurance software developers, ADM, maintain a series of discussions called Risk Heads which questioned why some customers believe that going direct to the insurer is unfailingly a cheaper option than arranging cover through a local insurance broker.
While the study is dated, we believe the results are still as just as relevant today.
Comparing the performance of direct sales from major insurers and that of local brokers, for instance, research by ADM revealed the following interesting differences:
- many people might think that by cutting out the “middle man” (the broker) and going direct to the source (the insurer) is bound to save money;
- the researchers in fact found the opposite – brokers are expert in establishing just what cover the customer may need, thus lowering the risk for the insurer, and, contrary to expectations, resulting in lower premiums offered by the broker when compared to those direct from the insurer;
- the explosion in use of the internet for practically every kind of shopping has made buying online, direct from the insurer, an apparently easier option;
- but brokers, too, have wasted no time in getting in on the act, and offer a service with all the ease of online shopping, yet with a distinctly local appeal;
- here at GSI Insurance, for instance, from our offices in Whitstable, we maintain fully online facilities yet also offer special deals on motor insurance to local customers living within a 25-mile radius;
Advice and guidance
- one of the areas where local brokers tend to win hands down when compared to major direct online providers is in the provision of advice and guidance relating to the particular type of insurance cover you may need and the range of products available across the whole of the insurance market;
- direct providers, of course, are able to furnish advice on their own products only and this is typically done through your access to a call centre – where some individual agents may have a patchy knowledge even of their own company’s products;
- even when your insurance needs are simple and straight forward, suggests the government’s own Money Advice Service, a local insurance broker may find you more appropriate cover at a more competitive price;
- it might also prove something of a myth that major online direct insurers are invariably faster in providing you with quotes and confirmed policy documentation;
- they may be quick, of course, but this is to little avail if the insurance product quoted or arranged is less than entirely suitable;
- if you know exactly what cover you need and a thorough knowledge of what the market has to offer, direct insurers might indeed respond very quickly – if you need to ask questions, if you want to make sure that the cover you are getting is suitable, and if you want it at an especially competitive price, however, the comparative speed of your local broker in sealing such a deal may be well worthwhile;
The personal touch
- a local insurance broker is able to give you a distinctly personal service, with care and attention to any local considerations which may be relevant to the cover arranged, and in the building of working relationships that are designed to last.
At the end of the day, therefore, your local insurance broker is likely to have – and to maintain – a definite edge over the alternative of buying direct from a major, yet seemingly anonymous, insurance provider.