A good broker can be crucial to a business getting the right cover
In many of the developed countries, specifically in Personal Lines insurance, many policyholders are choosing to do Insurance direct with Insurance Companies rather than use the services of an intermediary or a broker. Direct Insurers have grown substantially over the last decade and have very extensive information technology systems in place to make the experience an easy one. Because of Application technology one can literally interact with their insurance company at any time of the day and night. The most famous example currently of where the technology is going is Lemonade who allow a policyholder to have their policy issued within minutes on an interactive application system. Claims too are dealt with in a similar manner but is this the future of insurance as we know it?
Certainly, the new generation want to be able to buy insurance policies at midnight on their mobile phones if they chose to, and in an ease of insurance where most products are the same and the only differentiator is service and brand. When it comes to personal policies, it is clear that unless the insurer can compete on this same basis they will have issues shortly.
The broker is probably less relevant here. However, when it comes to commercial insurance policies, specifically the more niche policies being Engineering Contractors all risks, Marine, liability, Business Interruption and Guarantees, the role of the broker becomes critical. These products are crucial to mitigate the most important business risks and if the wrong product is bought or the wrong cover is taken, the financial losses to a company may be crippling. The Broker is well versed in the various commercial covers that are available and is also able to perform a financial needs analysis for the company. This will give a broker a good idea what the business is about and what level of risk it faces. For example, a transporting company would need Goods in Transit cover along with Motor and Liability cover. A construction company would need Engineering Contractors All Risks and a Plant policy and in all likelihood a construction Guarantee provider who can assist it in proving its employers with Guarantees. The broker also provides a record of advice detailing all these issues as well as the major exclusions limitations of these policies so there is no dispute thereafter. A good broker can make the difference between having the correct cover in times of need or suffering a loss that you can ill-afford.
The broker is also aware of the correct Insurance Companies to support for the specific cover. There are generalist Insurers who are able to provide cover across the commercial spectrum but when it comes to the niche covers such as Guarantees, they will be aware this cover is specialist and only specialist insurers play in this space. They will know who the market leaders are and how to negotiate the policy correctly on your behalf given the complexities of the product. The Insurer appreciates dealing with a good broker as well as the correct policy can be put in place and there are then no issues with respect to claims.
by Danny Joffe : Chairman of Klapton’s Ethics, Nominations & Remuneration Committee