2018-02-09 00:00:00 UTC
When you’re a business owner, making sure your insurance policies protect your assets and your business is important. Many business owners postpone insurance requirements, either because they see it as an unnecessary cost, or because they think its too much hassle to go through the processes and haggling, especially in an industry where trust is scarce. However, it is very likely that the success or failure of your business can rest on whether you have the right insurance in place.
There are many options on how you buy your insurance. You can purchase direct from an insurer(through an agent) or you can engage the service of a licensed insurance broker.Which option you choose comes down in part to how comfortable you are with your insurance knowledge and how much time you have available.
The primary arguments for the agents is that a business directly deals with the insurer, and so they get to cut out the middleman. Customers perceive any middle man as an unnecessary third party, and conventional wisdom dictates that this means additional cost and possibly mistakes.
To a customer, these are the 4 things that matter:
Lets take a look at brokers vs agents in providing these services, and then evaluate which is better.
99% of the time, price does not differ between an agent and a broker. This is because brokers save some operation costs for the insurer, and handle most business clients and risks, so the insurer is willing to take a lesser profit on broking channel in order to encourage equitable channel distribution.
Brokers are entities representing the customer, so they always shop around for the best options possible. An agent, representing an insurer, is always target driven, and might pad the premium if he/she knows you aren’t looking to compare.
That is not to say that prices are always same. In certain cases, like commercial vehicles, agents might have better pricing than brokers. So while you are likely to get good prices from an agent, there is generally more transparency from brokers, who represent the customer.
When it comes to business insurance, it is important to remember that because of the complex nature of commercial insurance products, you often don’t know what you don’t know , and this could lead to holes in your policy that can leave you uncovered in critical times.
Having a broker really works in your favour when crisis hits. Whatever mishap leads to you needing your insurance coverage, having a broker to work directly with is a great way to move through the red tape. A good broker will fight for you and get you the money you need from your insurance company. Brokers are also licensed to sell multiple products, and can be your one stop shop for your insurance needs.
There are differences in many insurer’s products, and an agent is trained to sell his product, and focus on its strengths, not on your requirements. A broker is best positioned to understand your needs and show you quotes that fit your requirements.
Many consumers have the impression that buying policies directly would be the easiest option for them, as claims will be easier. While this may differ from agent to agent, in general, a broker is again your best bet here.
When it comes to business insurance, brokers foresee operational hiccups, and make risk management easy for the client. In times of claim, the broker again intervenes on your behalf with the insurer.
An agent, on the other hand will usually only handle the sale, and redirect you to someone else in the claims department. Lack of a relationship with that person can cause issues, which brokers are better equipped to handle.
So when it comes to claims, having a broker, who represents you, is always a better bet.
A broker will look at every facet of your business and the risks that it may face and will provide you with tailored advice specific to your situation. Brokers will also review the various policies available on the market and compare quotes.
They will be able to guide you through the process and explain aspects of your policy or note things that you may not have considered.
If you need to make a claim, a broker will be there to help manage the claims process
Because they’re doing the legwork for you, a broker will save you a lot of time. Even when it comes to documentation, we at Perilwise have found that clients are always happy when told the exact list of documents required beforehand, which is something brokers know, having dealt with all insurers in the market.
Agents are always chasing a target, and so they tend to push clients into making a payment, saying they will take care of the formalities later. In some cases, this works out fast and efficient for everyone, but in many cases, the agent might make assumptions about your situation that may cause problems in coverage or at the time of claim.
We see that brokers score higher than agents on understanding customer’s needs, claim service, ease of process; and are almost neck-and-neck on costs. When it comes to business insurance, it’s almost a no brainer when it comes to deciding “broker or direct?”.
At Perilwise, we decided that we wanted to be a step better than every broker. We provide the best possible cover for our clients, and we use every bit of technology that exists(and some that we had to put together ourselves) to ensure customer satisfaction.
This has resulted in:
a. online premium estimates for commercial lines(a traditionally offline space),
b. an automated backend for handling quote and claim processing,
c. a policy manager suite that allows a company to manage all its insurance needs, and
d. more customised solutions on demand(API integrations, chatbot support).
Perilwise are licenced insurance brokers, providing commercial insurance solutions online. There is a definite bias in the viewpoints, but this post is distilled from a discussion me and Sunil had while founding the firm, debating all the intermediaries in the industry and the roles they play.