Why do you need an insurance broker?
An insurance broker can save you time, money and worry. Just like an accountant or lawyer who provides you with professional advice based on years of training and experience, a qualified broker can do the same with your insurance.
When arranging insurance, many people take shortcuts without seeking proper advice, understanding the fine print or considering whether they are getting value for money. Often they end up with cover they don’t need and – even worse – without the cover they really do need.
Whether it’s home, car, life or business insurance, brokers provide advice and assistance to make sure you are properly protected.
Brokers have access to lots of different policies because they deal with a wide range of insurance companies and sometimes other types of underwriters as well. A broker will be aware of the benefits, exclusions and costs of competing policies on the market. They will also help arrange and place the cover and can often provide advice on how to make the most of your insurance budget.
Using a broker doesn’t necessarily cost more. Often it costs less because brokers have knowledge of the insurance market and the ability to negotiate competitive premiums on your behalf. A broker will also explain your policy and any special situations you need to watch out for. Furthermore, a broker is obliged to advise you of fees charged for services provided to you.
Is your broker qualified?
It’s always good to know that someone who provides an important service to you is qualified. Below is some vital information which will allow you to question an insurance broker about their qualifications to look after your insurance needs. While some people calling themselves insurance brokers have insurance qualifications, be aware that some do not possess broking qualifications. And not all insurance brokers are from NIBA member firms. All insurance brokers listed on www.needabroker.com.au work for NIBA member firms.
Are you protected?
All insurance brokers are required to be licensed by the Australian Securities and Investments Commission (ASIC). Their conduct is regulated by ASIC and they must comply with the requirements of their Australian financial services licence. They are also required to participate in a Government-approved consumer complaints handling scheme. Insurance Brokers Disputes Limited resolves disputes and complaints related to brokers.
NIBA brokers must also comply with the Insurance Brokers Code of Practice, which sets standards of customer care that must be complied with. A new, revised Code comes into effect on January 1 2007.
The Code requires clear and prompt communication with the client, proper representation when arranging policies and providing support in the event of a claim.
Is your insurance broker a QPIB?
QPIB stands for Qualified Practising Insurance Broker. It is a strict system of professional accreditation, introduced by NIBA in 1992, to ensure the highest professional standards. Insurance brokers who are QPIBs are obliged to meet and maintain rigorous standards of knowledge, skills and behaviour.
- Experience: QPIBs have at least three years’ experience in broking or seven years in an advisory role in the industry.
- Continuing Professional Development (CPD): For QPIBs, professional development is an ongoing process. They are required to keep their skills up to date through continuing education, a minimum of 24 hours per year.
- Association Membership: QPIB employers must be members of NIBA or of a similar overseas association accredited to run the QPIB program.
- Insurance Qualifications (either through senior professional assessment of distance education): Insurance brokers seeking QPIB status must have formal qualifications including Diploma of Financial Services (Insurance Broking).
- Code of Conduct: In addition to adhering to the law through the Financial Services Reform Act, as NIBA members, QPIBs are further bound by NIBA’s strict Code of Conduct. The Code must be clearly displayed in brokers’ offices and all employees must be aware of its provisions. Failure to comply with the Code can mean a fine up to $10,000 and expulsion from NIBA.
Tips for selecting a broker
There are some basic questions you need answered when selecting a broker, especially when looking for business insurance. You will benefit most by developing a close business relationship where the broker understands your future plans, the associated risks and how you like to do business.
Some of the answers are easily obtained by you. Others can only be answered directly by prospective brokers.
- Proximity or specialist service? Do you need a broker who operates in your area? If so, find out which businesses are based nearby by conducting a location search of this site. If you require a specialised business insurance service, search by broker specialty.
- What do you need? Do you need small business or domestic cover, personal service, special risk management services or technical advice? Would you prefer to work with a small or large insurance firm?
- Request expressions of interest: Ask the insurance brokers you’ve selected to give you an expression of interest or a proposal. This should detail:
- Their qualifications and registration with official bodies or associations (such as NIBA)
- Who would service the account
- Their experience with your type of business
- Their range of services
- Size of their “typical” client
- How they bill for work
- Referees.
- Making a decision: From the expression of interest you’ll get a feel for who may be right for you. As a business you might then ask them to make a presentation. At the presentation you should look for:
- Business compatibility
- Level of commitment
- How they propose to solve your insurance problems
- The competitive advantages of their firm over any others you may have selected.
- Review: Once you’ve made a decision, include a review period in the relationship with your broker. This allows both parties to discuss issues of concern and see if the relationship is working.
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