What is an insurance broker, what does he charge and how does he work?

How do insurance brokers work?

Insurance brokers represent insurance companies and provide expert advice to help you choose the best insurance policies for your needs. When you contact an insurance broker, you can expect an initial consultation during which they will ask you questions to understand your circumstances. The information they will ask for often depends on the type of insurance you need. For example, if you want health insurance, your medical history may be relevant. If you’re looking for income protection or life insurance, they may want to know when you plan to retire.

After your initial conversation, your insurance broker will search for suitable policies and contact you when he receives quotes from multiple insurance companies. They will help you understand the details of each policy, including coverage, insurance and costs, so you can make an informed choice. They should also help you understand the technical terms of the insurance provider and offer professional guidance.

Once you’ve chosen a policy, your insurance broker can set everything up for you.

How are insurance brokers paid?

Insurance brokers usually receive a commission. When you choose an insurance policy, the insurance company pays the broker a commission based on a percentage of the premiums you will pay, which means that working with a broker will not cost you extra.

Although the insurance company you choose will pay the broker when they represent you as a client, it is important to remember that insurance brokers represent your interests. They are regulated, so you are protected if the broker recommends an unsuitable policy because of the relationship with the insurance company or higher commissions.

What is the difference between an insurance broker and an insurance agent?

Insurance agents only offer advice on insurance products from one insurer. You may already know that you want to take out a policy with a certain insurance company because their values ​​align with yours or you like their benefits. An insurance agent represents that company and can give you guidance on the right policy for your needs. However, you must remember that insurance agents represent the company’s interests, not yours. Insurance agents won’t tell you if there might be a better policy for you with another provider.

In contrast, an insurance broker can advise you on policies from many insurance companies, not just one. Insurance brokers must offer impartial advice on the best policy. If you want to make sure you’ve explored all of your options, you may be better off with a broker than an insurance agent.

Can I use comparison sites instead of an insurance broker?

A comparison site can be useful if you know what you want your insurance to provide. For example, the price of your car insurance may increase at renewal, and you want to find a better price.

The comparison site offers fairly general insurance information, so you need to be sure when comparing your existing quote with the new one you get. In some cases it’s simple. However, many insurance products have complex terms and conditions and use technical terms that a professional broker can help you understand.

What are the benefits of using an insurance broker?

When shopping for insurance, you might be tempted to cut out the middleman and go straight to the insurance companies. Here are some of the benefits of working with an insurance broker.

1. Complete market consulting

As mentioned, an insurance broker represents more than one insurer and can help you compare providers in the insurance industry. This is known as ‘market-wide advice’. One of the most significant benefits is that they can introduce you to a provider you’ve never heard of before, but who perfectly meets your insurance needs.

Specialty brokers have detailed knowledge of the insurance companies in their area and the coverage each provider offers, but unlike insurance agents, they are not tied to one company.

2. Customized tips

When looking for insurance, you can ask your friends or relatives for recommendations. However, one insurance company may provide coverage that is ideal for them, but may not be the best choice for you. Insurance brokers take the time to understand your needs and circumstances to find the best deal.

For example, your lifestyle can be crucial in choosing the best health or life insurance. Insurers have different risk management strategies that affect how they calculate premiums and how your personal circumstances affect your coverage and cost. A broker can guide you through your options and advise you on comparing offers to understand the pros and cons of each policy.

3. A broker can save you time

You can contact insurers separately for offers. However, this may take time. You must enter the same information several times. Many insurers will provide quotes quickly, but you may have to look to others for an answer. Others may return with inquiries for additional information. Finally, you need to spend time comparing quotes before choosing a policy.

Insurance brokers will ask you for information in one conversation, and then they will contact the insurance companies for you. They will do all the chasing and contact you for more information only when necessary. They can also summarize each quote so you understand the fine print without spending hours deciphering technical insurance terms.

4. You could save money

Insurance brokers get a commission, so you won’t have to pay extra when you buy insurance through a broker. A broker can ensure that you get the best deal for your budget in terms of coverage and premiums. They can also advise on whether your policy remains the best choice when you receive a renewal offer.

Specialty brokers establish relationships with insurers while still acting in your best interest. This may give them access to offers not available to the general public, such as lower premiums or more cover for your money, so you get a better deal.

5. Help with requests

Most insurers offer a simple application process. For example, many health insurance companies allow you to submit a claim over the phone, online, or through an app. In most cases, this is the best way to initiate a request. However, your claim may be more complex in some circumstances, which means that the application process will also be more complex.

Some insurance brokers support their clients with complex claims, while others don’t, so it’s worth asking if this is important to you.

If you want to make a claim but need to know if you have the right coverage, your broker can often tell you. You won’t have to contact your insurers and potentially have your claim denied as denied claims can increase your premium in the future.

What to look for in an insurance broker

Finding the right insurance broker can seem challenging. A good insurance broker works for you, so working with someone you trust is essential. Here are some things to think about when choosing a broker.

Are they regulated?

The FCA regulates insurance brokers, and brokers appear on the Financial Services Register, which you can check for free. The register will also show whether they are authorized to advise you on insurance. Other trade associations, such as the British Insurance Brokers’ Association, can help you find a broker, but membership is optional.

The registry will also tell you if someone is an insurance broker or agent.

When you choose a regulated broker, you are protected by the Financial Services Charges Scheme and the Financial Ombudsman Scheme, which means you can claim compensation if something goes wrong.

Are they a specialist broker or a generalist?

A general insurance broker can advise on a wide range of insurance plans. They can be a great choice if you need several different policies, such as car insurance, health insurance and travel insurance. However, if you need one type of coverage, a broker specializing in that area may be a better choice.

They will likely have in-depth knowledge of the insurance available, so they can direct you to the best deal and provider for your needs.

How much experience do they have?

Every insurance broker has to start somewhere, but more experienced brokers will have time to develop their skills and knowledge of the industry. They will also gain experience in working with different types of clients and determining the policies that best suit their needs.

They can ask you about your current circumstances and plans to ensure you have a policy that can grow with you over time. This reduces the risk of changing service providers in the future, which can be complex.

Do you feel comfortable talking to them?

A good insurance broker will cut through the jargon and help you find the best insurance. If you feel like they are blinding you with science or that you can’t talk openly about your circumstances and needs, they are probably not the right mediator for you.

It is essential that you can talk to your brokers and ask questions without feeling intimidated.

What do their clients say?

You may have started your search for a broker by asking for referrals. However, to compare potential brokers, it’s a good idea to look at their reviews and see what other customers are saying. Third-party review sites such as Trustpilot and Feefo host independent reviews, and you can search for brokers by name. Brokers can also host reviews on their websites; however, they can choose the more favorable ones. It is generally a good sign if an intermediary provides a link to third-party sites on its website.

Getting professional advice

MyTribe guides help you learn more about insurance and make an informed choice. However, as our guide explains, talking to a broker can help you get the best insurance for your needs. Contact us for a comparative quote and we’ll connect you with a high-quality, regulated broker for tailored advice.