Short-term insurance brokers have numerous skills, and working through them can benefit you in many ways, pro-broker insurers and brokers say.
Dave van Alphen-Stahl, the executive general manager of personal business at Mutual & Federal, says a broker can add value through knowledge, by independently assessing products and facilitating service.
"The broker is not a middleman," he says, but rather a member of "your team".
Alphen-Stahl says brokers have a role to play in the short-term insurance industry because:
- There are so many insurance policies to choose from. Alphen-Stahl says the industry is more competitive than ever and the choice of policies is huge. New policies are being developed and old policies are being enhanced. Policies can be highly flexible, enabling you to add cover, reduce cover or customise your cover. You may need advice if you want the right cover at the right price for the right circumstances.
"Careful thought has to be given to limits, exclusions, special conditions and the extent of the cover as a whole. Reducing premiums can simply be achieved by reducing cover in one form or another," Alphen-Stahl says.
"Industry professionals are well placed to assist in market education on issues like this."
- Policies - especially the fine print - can be complex and expensive. Alphen-Stahl says policies are now more complicated than ever and you may need help in understanding them. He says that claims following the September 11, 2001 attack on the Twin Towers in the US pushed re-insurance costs to a new level of magnitude. Legal claims and counter-claims also placed the spotlight on the need for a more precise understanding of liabilities and exposure, he says. Contract wordings and the interpretation given to certain terms and conditions have subsequently changed. You may need help grasping how subtly amended definitions affect your cover.
Keith Young, the managing director of First Link insurance company, says that the premiums of local policies are also rising because of increased crime and the deteriorating state of our roads and poor road safety standards.
- People have too little time to deal with insurance issues. With modern lifestyles and the growth of two-breadwinner families, working couples face acute time pressure, Alphen-Stahl says. For them a broker can be very valuable, because they can delegate insurance issues - including the facilitation of claims - to their broker.
- Brokers do not have a conflict of interest. Young says a broker has no conflict of interest because he or she does not carry the risk of having to pay out your claim and is therefore not unduly influenced by the cost of claims. Brokers have your interests at heart, and their primary concern is the fair and prompt settlement of your claim.
- Service model. Young says direct insurers are centralised and offer their services from a call centre. Brokers, however, are localised and have a customer focus, giving advice and attention to customers.
- Brokers can save insurers money. Alphen-Stahl says Mutual & Federal has one of South Africa's largest branch networks, but many insurers have "rationalised" their networks and use brokers, especially in smaller towns or rural areas.
To make the most of your broker's skills, Alphen-Stahl says you should:
- Arrange regular reviews. It's your responsibility to ensure cover is adequate, but professional help is always useful. Renovation and building costs tend to go up over time; replacement values of household goods do, too; inflation affects all prices; an extra year "on the clock" affects vehicle trade-in and retail values. Such factors should be reviewed to ensure cost-efficient cover in line with your needs.
- Keep your broker "in the loop". When a significant event occurs, tell your broker. It may affect cover or pricing. Examples include retirement, your 25th and 55th birthdays, moving home (especially if up-scaling, downscaling or entering more secure premises) and the departure of offspring from the family home.
"Mutual & Federal is pro-broker because we are pro-consumer. Industry and social developments in recent years have tended to increase the intermediary's value to the consumer," Alphen-Stahl says.
"The smart consumers' response to greater insurance complexity and greater pressure on their personal time is to harness the broker. Put him or her to work. The broker provides value-for-money services. Smart consumers will optimise that value."
Alphen-Stahl says the enactment of the Financial Advisory and Intermediary Services Act and the debate around the broker's role will foster even higher levels of service from insurance brokers.