Insurance brokers in South Africa are competing with direct insurance companies who now cut out the middleman. Like many insureds, you no doubt wonder whether it’s better to go direct or use an insurance broker. Both models have advantages and disadvantages. The difference between an insurance broker and going direct is:

Time

Insurance brokers meet with each client to determine their insurance needs and then source multiple quotes from numerous insurance companies. Although this method provides more specific insurance catered to the needs of the insured, it takes time. For insureds looking to cover their assets quickly, direct insurance companies can quote and bind an insured to an insurance policy over the phone.

Cost

While going direct promises to be cheaper, some studies suggest that they’re not. Direct insurers may not have to pay insurance brokers’ commissions, but they do have to cover their marketing fees and costs to obtain and signup new clients. They also have large call centres which are paid for by premiums.

Convenience

Insurance brokers require face-to-face interaction to determine your insurance requirements. This means setting up a meeting, while direct insurance brokers are conveniently available via telephone or email, and now by SMS. That said, claiming through an insurance broker is simpler than claiming from a direct insurance company as the broker handles the correspondence and advises the insured.

Choice

While direct insurance companies only offer quotes and insurance policies that they themselves underwrite, insurance brokers can obtain multiple quotes from various insurance companies. The problem, however, with insurance brokers, is that they more often than not recommend those quotes from those insurance companies which promise them the highest commission.

The Financial Services Board is considering restructuring insurance broker commission to prevent insurance brokers’ bias. The proposed models will either see the insured pay the broker or give permission to the insurance company to pay the broker a commission.

Online insurance aggregators, however, provide multiple insurance quotes directly, which gives the insured a range of options to choose from. For more information on brokers in your region, see the links below, otherwise fill in our online form and an insurance representative will contact you to provide car and home insurance quotes.