Why a competent insurance broker is good for you

WHY A COMPETENT INSURANCE BROKER IS GOOD FOR YOU

Today the insurance industry is facing changes that seek to challenge the traditional way of conducting business. These changes are a potential threat to some, while offering untapped opportunities to others. However, the changes are only on the surface and the reasons why insurance exists have not changed. Despite the changes occurring that unveil innovative customer services and new business models, the industry remains a very technical and complex services sector. It is safe to say that even a fairly educated fellow will have problems understanding the difference between a settled and repudiated claim. Be that as it is, I would not want you to forget that the problems it solves are simple and affect the common.

The need for a professional advisor adding value to your business and taking care of your risk profile cannot be over-emphasized in insurance. In this article we’ll discuss the need for an insurance broker and we’ll conversely benchmark what a good broker should be doing in so far as your insurance needs are concerned. We will adopt the definition of insurance broker set out by Cummins and Doherty (2005, p.5): an insurance intermediary (or broker) is “an individual or business firm, with some degree of independence from the insurer, which stands between the buyer and seller of insurance.” The fundamental difference between using a broker and going direct is that the broker works for the insured, not for the insurer.

While an insurance company and/or agent are interested in selling a policy to you, a broker acts in the interest of the client, the insured. Firstly, the broker helps you evaluate, assess and understand your specific insurance needs and will then formulate customized solutions  that best respond to your needs at the right price. Brokers possess the experience and practical insurance knowledge to advice businesses on risks which have a potential of adversely affecting the smooth running and sustenance of a business. It often occurs that a client only realizes at claims stage, that the policy s/he took does not respond to her/his needs at hand. A broker negotiates a commensurate premium, ensures that the insurer’s unnecessary overhead expenses and potentially overstated profit margins are kept in check, acts as a risk manager and assists the client through the claims processes, all for the benefit of the client. 

Leading international researches have shown that some brokers demonstrate a superficial knowledge of their customers’ needs and a lack of understanding for their business. It is therefore important that clients engage brokers who are competent and qualified and their professional stance is beyond reproach. A consultative approach to broking offers cutting edge solutions to customers’ needs informed by a thorough person-oriented approach. Risk management is always a personal undertaking that demands brokers to partner with their clients. Very little will be achieved if the broker demonstrates a lack of knowledge of his client’s interests. Traditional transactional selling of insurance is fast losing relevance as there is a shift necessitating emphasis on a consultative approach, which requires fostering personal relationships in cultivating business.

The broker acts as a partner and problem solver to your business’ risk management needs. Brokers work to understand your business operations’ processes and future strategic objectives and plans. They work to curtail your business risks thereby minimizing losses, particularly by recommending risk improvement strategies. The broker will organize periodic meetings with you, provide training recommendations, provide up to date information on changing risks and be an ardent advocate for your claims. As said above, insurance is a complex discipline and while insurers may be interested in settling your claims as a corollary of their strategic goals, they are not interested in pursuing your core interests in such a manner a broker can do.

Kabelo Ntitsane ǀ Claims Negotiator – Short Term  ǀ Minet Lesotho