The definition of a broker is “a party that mediates between a buyer and a seller”. In the world of business and commercial insurance, a broker is an individual or a business that is approached by a business seeking insurance. Importantly, the broker acts for the business. The broker will collate relevant information required in order to get a quote from insurers or underwriters.
Depending on whether this is commercial combined insurance (business assets, buildings and liabilities), commercial property insurance (business buildings) or commercial liability insurance (employers, products and public liability) will affect the work the broker does.
For commercial liability insurance the range of insurers available, the products they supply, their terms and conditions and importantly the competitiveness of their premiums varies greatly.
In the UK the business community has been served well by insurance brokers for many, many years. Not only is the brokers role important at quote and binding (arranging cover) stage, they are there to support the business in the event of a loss. This is the most important part of the insurance policy, the broker really delivers service when you need it most.
We are being taught, and this has grown during 2008 and 2009, to look around for a better deal and not accept the first offer from anyone. Part of this has grown into a process of going direct to the supplier. In the above definition, the business customer acts as their own broker.
We are not saying this cannot be done, but insurers are at pains to point out that you get exactly the same deal from a broker as you do direct, so why spend all that time searching for products which all have different terms and conditions, when you could get a broker to do it for nothing!
Getting a quote from a broker is free, we have stated above that in a commercial insurance transaction, they act for the business buyer. They will receive commission from the insurers but ultimately they are not acting for the insurer.
A word of caution though, some commercial insurers have direct commercial insurance divisions. Effectively, they are trying to undercut their broker division to make more money. But, the cover is not always the same.
Business insurance brokers have a role to play now and in the future, don’t get caught out buying insurance direct. Whilst the insurers have claims departments, their job is not to pay claims that fall into the “grey area” so don’t expect too much help and support when your business has been flooded at 7am on a Saturday between Christmas and New Year!
As we have said, the broker acts for the business so part of their role is to get the maximum claims settlement possible. Although it is difficult to gauge, of the claims we put to insurers approximately 5% are turned down or repudiated. Of this 5%, at least 75% are paid when we have appealed on behalf of the customer through checking policy wordings, definitions etc.
