What is an Insurance Broker and Why Do You Need One?

The term “insurance broker” can sometimes be confusing. Indeed, not everyone may know what an insurance broker does and how this role differs from an agent.

Both agents and brokers act as a negotiator between the insurance buyer and the insurance company. The two differ in whom they represent: insurance agents represent the insurer while insurance brokers represent you, the buyer. There are times when an insurance broker is also an insurance agent. If this is the case, the broker should make this clear with you from the outset.

Insurance Brokers: An In-Depth Look

Insurance brokers are insurance and risk management specialists. They help you decide what to insure by identifying and analysing risks and how best to manage them. In addition, insurance brokers may specialise in one or multiple types of insurance. This means they can help you with both personal and business needs. Finally, insurance brokers are familiar with several companies’ benefits, exclusions, and terms and conditions. They can help you customise the most suitable plan and maximise your insurance budget.

All Perth insurance brokers and the thousands of others working across the country must have a licence issued by the Australian Financial Services or AFS through their brokerage firm. As an alternative, they can be appointed by an AFS licensee as an authorised representative. Everyone with an AFS licence falls under the regulation and monitoring of the Australian Securities and Investments Commission (ASIC). As part of their AFS licence’s conditions, insurance brokers must be members of a dispute resolution scheme. This is to ensure that there is an independent organisation that can help resolve issues between brokers and their clients.

Insurance brokers are also bound by strict conduct standards. They must prioritise and act in your best interests, especially if there is a conflict with their own. They must provide not just appropriate advice, but also let you know when and if the advice they are giving is based on incomplete or inexact information. Lastly, insurance brokers are obligated to provide a statement of advice to document everything they advised you in relation to the policy.

Why You Need an Insurance Broker?

Reading the above, you can rest assured that your rights and interests will be protected by working with an insurance broker. If you need more convincing, though, here are more reasons to consider getting the services of an insurance broker.

  1. They know what they are doing. You’ll find that many insurance brokers in Australia hold diplomas in insurance broking or other related tertiary-level qualifications. Many of them also hold the designation of “Qualified Practising Insurance Broker,” which is issued by the National Insurance Brokers Association or NIBA. All of these is to say that insurance brokers know what they’re doing and they act based on high professional standards. They will give you some of the best advice when it comes to your insurance.
  2. The wealth of choice. Australia has plenty of insurance options to choose from, and working with a broker will give you access to most, if not all of them. In fact, because insurance brokers deal directly with insurance companies, they can offer you policies that you may not have known about on your own.
  3. Less complicated. You may think that using a mediator between you and the insurance company will complicate things. In fact, it’s the opposite. Insurance brokers can simplify your decision-making process by laying out the best options out of the hundreds to choose from. Moreover, they can also help you understand all the fine print of your chosen policy and ensure that all risks are properly covered.
  4. Best value. Brokers will ensure that your policy is customised down to every unique detail of your personal or business risks. They will ensure that everything you pay for is actually something valuable to you or your business. In addition, insurance brokers can negotiate terms with the insurance company so that you can get the best deals. This is especially ideal if you have a strict budget for premiums.
  5. Easier claims. Insurance brokers have technical knowledge of the industry. They can help you navigate tricky situations and give you sound advice if and when you need to make a claim.

Insurance is like a bug-out bag: something that you hope you don’t use but prepare nonetheless so you’re ready for emergencies. With the help of an insurance broker, you can customise your “bug-out bag” for your peace of mind, knowing that all bases are covered in times of crisis.

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