Direct Insurance

Sometimes having too many choices in life can be confusing. This statement is certainly true when you need to buy any type of short-term insurance – whether it is car -, home -, content-, travel- or liability insurance. One of the decisions you need to make is whether you are going to make use of an insurance broker or whether you are going to buy your insurance cover directly from the insurance company.

What is the difference between buying from an Insurance Broker and buying Direct Insurance?

The Insurance Broker

First, you should not confuse an Insurance Broker with a representative working for a specific insurance company only. The latter will only sell insurance policies from the company he works for. An Insurance Broker is usually an independent person, working on a commission basis. He will investigate different insurer’s products to find the most suited product for his client. His commission will be included in the monthly premiums the client will pay.

Direct Insurance

When you decide to go the direct route you cut out the middle man, being the insurance broker, and deal directly with the insurance company. Direct Insurance is mainly sold in one of two ways:

  1. Through an internet web site.
  2. By phoning the Insurance Company’s Call Centre.

This method of buying short-term insurance directly has become increasingly popular in recent years and there are a number of benefits attached to buying insurance directly from a company.

The benefits of buying Direct Insurance

One of the biggest benefits must be the convenience and time-saving direct insurance buying offers. You can sit in front of your computer, or simply pick up the phone, and arrange your insurance whenever it’s convenient for you. No making appointments to go and see someone in person; no long form-filling required.

Most Direct Insurance Companies now even give you the convenience of having their claim forms available online. Some have their entire claims procedure available on the internet enabling you to follow the progress of your claim step-by-step.

The internet offers you the added benefit of becoming educated about the different insurance products being available in the market, how it operates and how you need to claim.

On the Internet you have a wide variety of choice – through Insurance Aggregator web sites you can obtain quotes from a number of insurance companies after you have only indexed your details once. This gives you the opportunity to compare price and product – again in your own time.

You are still left with the choice

Using an intermediary such as an Insurance Broker, also has benefits. Their knowledge about specialized products may be required if your insurance needs are complicated. In terms of legislation insurance brokers must meet certain qualification standards and must also be registered with the Financial Services Board. If you decide to go the route of using an Insurance Broker, make sure that the person is a registered intermediary.

The big debate… is it really cheaper to buy direct insurance?

You may have seen or heard people saying that the quote they received from a broker was cheaper than the one they received from a direct insurer. There will always be exceptions to every rule and what one needs to remember is that an insurance quote is based on many individual factors. If you have been making regular claims on your short-term insurance policies you will be classed as high risk and you will pay more for insurance anywhere. This is just one of the influencing factors.

The commission structures

Direct insurances companies obviously pay their staff or agent working in their call centres commission when they write new insurance business. But it is a once-off fee. When you take out insurance through a broker you, as the broker’s client, will pay him commission monthly for as long as you have the insurance. This is why direct insurance can offer you cheaper rates in most cases.

In the end, the choice is still yours. Do your homework and compare different quotes before you decide on any insurance product. Also, make sure that you do not only consider price but that the product provides you with the specific insurance cover you require.