What is an Insurance Broker?
Let’s take a deep dive into Insurance Broking, including what that means for you as a potential client.
What is an Insurance Broker?
Many clients assume all brokers are the same but we know that is not correct. An Insurance Broker is a qualified risk advisor that specialises in providing appropriate insurance solutions for their client. Insurance Brokers are typically utilised for Commercial Insurance as the risks are more complex and the cover often needs to be tailored with the assistance of a professional and trusted insurance advisor. Insurance Brokers must comply with all legal and regulatory obligations to ensure they are acting in the best interest of the client. Insurance Brokers act for their client and not the insurance companies or underwriting agencies they place business with.
What do Insurance Brokers do?
Insurance Brokers provide an end to end holistic solution for insurance and risk management. Insurance Brokers assess insurance risks, collect relevant data, source and tailor insurance products, whilst also advising and recommending the most appropriate insurance solution. They will also assist and manage an insurance claim that might occur during the year.
How to become an Insurance Broker in Australia
To become a qualified and practicing insurance broker in Australia you must complete the relevant qualifications to provide advice under financial services law. Once you’re authorised, continuing professional development (CPD) are required as an ongoing commitment to ensure sufficient development, knowledge and training is maintained to comply with ASIC guidelines. As a client you should ask what experience does your broker have and what are their qualifications. Do they understand your business and your industry.
How much do Insurance Brokers cost?
The cost of an Insurance Broker will vary between each brokerage, particularly for corporate insurance programs where there is more flexibility with cost structure. The cost of an Insurance Broker will depend on the complexity of the risk and the time spent on securing insurance markets to underwrite the risk.
Brokers can be paid a commission which is paid by Insurers and is generally a percentage of the premium. A Broker Fee may also be charged which is shown on the Insurance Invoice and paid by the client.
How to choose the right Insurance Broker for you
Whilst there is no simple answer, the most appropriate solution is to seek a reference from a colleague or associated business or have potential insurance brokers present to you their services and how they can help you. Get to know them before proceeding with the quotation and advice process.
Some key areas that you may want to understand include:
- What industries / products do they specialise in?
- What are their qualifications and experience?
- What are their broking services and does this remain consistent each year?
- How will they manage any claims or incidence that arise?
- What industry bodies are they members of?
- Are they based locally or visit the area on a regular basis
- Do they own the broking business or are they an employee
Sometimes having these discussions can help businesses prepare for different situations as time passes.
The information provided by Hunter Broking Group Pty Ltd on this website is for general information purposes only, and it is not a substitute for professional advice. You should always consider the PDS/Policy wording before making a decision. Coverage may differ based on specific clauses in individual policies. Refer to the FSG on our website or by requesting a copy for our services and remuneration details.
This article originally appeared on Hunter Broking Group Media and has been published here with permission.
Advisr does not provide advice and does not hold a financial service license (AFSL). All information above has been provided by Josh Ryan.