Why insurance brokers needed ?

MarkoC

If anyone can explain me theyr purpose please.
Is it just about feeding a group of people or whats the story with them ?

For example, few years back when i was after an insurance for my car, I also got a quote from AXA, it was roughly 1600 yoyos

Then went to McCarthys Insurance Group and got a quote roughly for 1200 yoyos for the same company, as they are brokers so they only mediate the insurance.

So the difference was 400 yoyos...

My main question here now is, why AXA (also some others) do or did theyr policies way cheaper via broker(s). As far as i understand about the things, its way cheaper to communicate with the customer straight and deal with the whole case rather than you have a broker between you and the customer.

How much the broker makes money with one customer or how much main insurer loses at the same time, why not to make straight good deals between the main Insurance group vs customer ?
For me it sounds like theres artificially made special offers by main insurance groups to keep theyr prices high or ...

Thought ?

Iron Hide

yes but brokers could deal with 100's of clients for axa, think of it as a kind of group discount.

Max_Damage

I've often wondered this myself. Maybe they're all in some sort of cartell...

Bluetonic

MarkoC wrote: »

My main question here now is, why AXA (also some others) do or did theyr policies way cheaper via broker(s). As far as i understand about the things, its way cheaper to communicate with the customer straight and deal with the whole case rather than you have a broker between you and the customer.

For a start if the insurer deals directly with each individual customer have you factored in the cost of this which would get passed onto the premium? On top of other things.

MarkoC

Bluetonic wrote: »

For a start if the insurer deals directly with each individual customer have you factored in the cost of this which would get passed onto the premium? On top of other things.

So do the brokers, so thats not an excuse here me thinks ...

Alanstrainor

MarkoC wrote: »

So do the brokers, so thats not an excuse here me thinks ...

The brokers don't take on any risk though. If someone makes a claim a broker doesn't pay out.

Compton

the insurers sell policies in bulk to the brokers, cheaply. then the brokers sell them on, and deal with the queries/claims etc.. saves the insurer the hassle

MarkoC

shblob wrote: »

the insurers sell policies in bulk to the brokers, cheaply. then the brokers sell them on, and deal with the queries/claims etc.. saves the insurer the hassle

Dont you think it would cheaper to hire few more people and sell the policies for cheaper and make some more profit rather than to sell them to a broker ?
Just a quick calculation:

1 policy difference 400 quid
1 salesman sells them (if they are well priced of course, about 10-20 a day.
We have 20 full working days in a month,
Salesman wants ... well, now theres a question, how much he wants
Extra worker in AXA Call centre would cost to Axa roughly 3000 yoyos in a month/150 yoyos a day ... And you CAN work from home, if the company IT is well built ...

I still dont get it :P

Compton

its the quantity of policies they sell through ALL the brokers in Ireland. It makes sense to me..

CoDy1

Not only can brokers sell polices cheaper than direct companies, they are supposed to offer advice and find the best deals suited to a customers needs (which isn't just price).

They work for the consumer not the insurance companies and can save people alot of time and money.

Also, alot of insurance companies only sell through brokers.

MarkoC

shblob wrote: »

its the quantity of policies they sell through ALL the brokers in Ireland. It makes sense to me..

They can drop the prices and hire more people to work for themselves and they would sell even more policies or ?

Example
Ok, if they sell 300 policies to small broker and they sell only 120 policies, what happens then ? Will they take the policies back which were not sold out, or still get the money for 300 policies ?
So if the broker sells them for 400 yoyos cheaper than the main insurer and wont sell them all, they should be coverd for all policies ? Which means they get the policies for pennies to cover their not sold policies, rents, fees, wages, taxes and so on ...

If i had to chose, either to sell 300 units for 100K to a broker, or to hire a salesman, pay him 3000-5000€ and sell all the policies for 200K. Makes me nearly 95K profit ?
Instead of that they selling theyr policies in theyr own office 300 units for 400K and selling bundles to the brokers ?
Doesnt make any sense to me to feed a bundle of people (brokers) if i was an insurance co owner ...
As far as i know theres no brokers in norther/eastern europe, every insurance company deals directly with theyr own customers.
So thats why these questions came into my mind and made me suspicious that the insurance prices are artificially kept high over here ...

Compton

MarkoC wrote: »

They can drop the prices and hire more people to work for themselves and they would sell even more policies or ?

Example
Ok, if they sell 300 policies to small broker and they sell only 120 policies, what happens then ? Will they take the policies back which were not sold out, or still get the money for 300 policies ?
So if the broker sells them for 400 yoyos cheaper than the main insurer and wont sell them all, they should be coverd for all policies ? Which means they get the policies for pennies to cover their not sold policies, rents, fees, wages, taxes and so on ...

If i had to chose, either to sell 300 units for 100K to a broker, or to hire a salesman, pay him 3000-5000€ and sell all the policies for 200K. Makes me nearly 95K profit ?
Instead of that they selling theyr policies in theyr own office 300 units for 400K and selling bundles to the brokers ?
Doesnt make any sense to me to feed a bundle of people (brokers) if i was an insurance co owner ...
As far as i know theres no brokers in norther/eastern europe, every insurance company deals directly with theyr own customers.
So thats why these questions came into my mind and made me suspicious that the insurance prices are artificially kept high over here ...

you also have to hire a lot more extra staff to deal with aftercare and claims..

johndaman66

Bluetonic wrote: »

For a start if the insurer deals directly with each individual customer have you factored in the cost of this which would get passed onto the premium? On top of other things.

I dont particularly buy into this. Some insurance companies have no quams whatsoever in dealing with the public while more such as RSA insurance for example wont quote you directly at all and you will need to go through a broker. However, you would need to wonder why companies that deal directly with the public do so if its costing them money? Why dont they advise you to go through a broker before they quote you at all or why do they provide a number and expensive up to one page advertisements in the golden pages in the first place?

Someone also mentioned that brokers act on behalf of the consumer as oppossed to the insurance company. I would seriously question such an observation also. It would seem that many act on behalf of only one insurance company and when you sometimes can go directly to that insurance comapny and get a more competitive quote you would seriously wonder. For example I went to two separate brokers for a quote some years back. Both quoted me with Hibernian insurance. Then I went directly to Hibernain for a quote. It turned out one broker was a small wee bit cheaper than the direct quote I got from Hibernian (30 - 40 quid as I recall) while the other was a few hundred more expensive.

The whole arrangement still seems a wee bit fuddy duddy to me.

colm_mcm

Also remember that initial quotes can be high, when you mention that you got a better price they can magically drop their initial quote by hundreds.

RandomAccess

When it comes to renewal time they shop around on your behalf as well,
quite impressed with my dealing with McCarthy insurance. I still check if their renewal quote is competitive when it arrives, and have been happy with it for the last two or three years.

MarkoC

RandomAccess wrote: »

When it comes to renewal time they shop around on your behalf as well

In these days they use a very basic search engine for it, its 21st century , All they have to do is to put your details in and all the offers come onto the screen with the insurance companies they co-operate together.

-Corkie-

MarkoC wrote: »

In these days they use a very basic search engine for it, its 21st century , All they have to do is to put your details in and all the offers come onto the screen with the insurance companies they co-operate together.

Who cares how basic it is if they are cheaper. I have used them before and find them very nice people to deal with.

MarkoC

-Corkie- wrote: »

Who cares how basic it is if they are cheaper. I have used them before and find them very nice people to deal with.

Sry if you didnt get the point of the thread ...
Yeah we using them as well, but for me seems like thats one of the reasons which keeps insurance prices artificially high ...
More people could get work and insurances prices could come down if the insurance companies hired few more people to work for themselves.
And you right here, noone cares and thats exactly why prices are high

-Corkie-

I dont agree with you there. Look at Quinn direct`s prices compared to going to a broker.

MarkoC

-Corkie- wrote: »

I dont agree with you there. Look at Quinn direct`s prices compared to going to a broker.

So broker does the policy cheaper ? Or what do you mean ?

KindOfIrish

MarkoC wrote: »

Dont you think it would cheaper to hire few more people

It would be more expensive to hire people. Ask any employer. So many costs associated with employees.

Alun

MarkoC wrote: »

Sry if you didnt get the point of the thread ...
Yeah we using them as well, but for me seems like thats one of the reasons which keeps insurance prices artificially high ...
More people could get work and insurances prices could come down if the insurance companies hired few more people to work for themselves.
And you right here, noone cares and thats exactly why prices are high

In case you were wondering, or implying that it was, it's not just an 'Irish thing' either ... they have brokers or similar constructions in other EU countries as well including to my knowledge Germany and the Netherlands.

I used one in the Netherlands when I was getting insurance on my own car for the first time after having a company car for 10 years where the insurance was in the company's name .. no insurance company I contacted myself was interested in giving me any kind of allowance for that period of no claims, but the broker managed it somehow. Also when I moved here I had a lot of trouble getting my Dutch NCB recognised, but again a broker managed it. I think they just have closer contacts with the relevant insurance companies and know exactly the right person or department to contact.

-Chris-

What about the case where you'll normally get a cheaper quote by calling the insurance company than you will online, despite the fact that it'd be cheaper to do it all online rather than paying someone to take the call.

Any thoughts?

oldyouth

Firstly, brokers don't buy a block of policies in advance from any insurance company. They have access online to all insurance company prices, pick the one best suited to the client and issue the documentation via computer link. Insurance companies pay the broker, generally, 5-10% of the premium for this. It saves the insurer money not to allocate staff resources to do this.

Insurers are trying to channel all their business either through the broker network or through online purchase. They do not wish to hire increasing numbers of staff in case they wish to withdraw from a market, leaving an ongoing wage bill that would take years to bring down through redundancy or natural wastage. To a broker, if one insurer withdraws, they will place their business with the next best company, so their staff levels remain viable.

Insurance is a complicated business and brokers offer a valuabe face to face service to the locality. There are insurers out there that you would never have thought of, or who don't want to deal directly with the public. A good broker has access to these and they may be a perfect fit for your circumstances

johndaman66

oldyouth wrote: »

They have access online to all insurance company prices, pick the one best suited to the client and issue the documentation via computer link.

I have to disagree with that statment. One would assume that a good insurance broker deals with all insurance companies or at least the vast majority of them and get the most competitive quotes/ packages for their clients in this manner. But I know for a fact that most deal with only a few companies at best and in some cases only one company. I think it still hardly answers the OP's question of why insurance brokers are needed and seriously calls into doubt the fact that they act on their clients behalf or at least are suppose to....in particular when you can often get much more competitive rates when you go direct to the company.

ABajaninCork

-Corkie- wrote: »

I dont agree with you there. Look at Quinn direct`s prices compared to going to a broker.

Totally agree. I'm not used to brokers being English and used to dealing direct. Have been with Quinn since moving here since they were the only people willing to insure me both here and in the UK.

Just got my renewal. No claims since being here, and my premium INCREASED by E80!!:eek:

After taking advice on here went to a broker and got a BETTER insurance, lower excess, free windscreen cover which I did not get with Quinn and free breakdown cover too. All for E200 less....

oldyouth

johndaman66 wrote: »

But I know for a fact that most deal with only a few companies at best and in some cases only one company. I think it still hardly answers the OP's question of why insurance brokers are needed and seriously calls into doubt the fact that they act on their clients behalf or at least are suppose to....in particular when you can often get much more competitive rates when you go direct to the company.

Your 'facts' are wrong then. A typical insurance broker will have access to 20+ products for motor insurance and will promote the best value to the client. Yes, some insurance companies will let out their products to a very select number of brokers and offer singnificant discounts to attract the brokers business, but those brokers still have access to the mainstream insurers.

Some insurers will offer business cheaper direct than through brokers and I did address the reason why. Partly, it's down to it being cheaper to provide automated cover than pay a broker up to 10% of the premium in commission but also, they want you to deal directly with them rather than you going to a broker who may find a better policy for you elsewhere. The broker is also able to ensure you get the correct policy benefits, whereas the online companies often have them as add-ons, which are often overlooked

maidhc

johndaman66 wrote: »

....in particular when you can often get much more competitive rates when you go direct to the company.

On my last few renewals it has been cheaper to go through a broker than direct. In fact it has generally worked out better for me to be insured through Axa/Aviva through a broker than directly with the company.

quad_red

RandomAccess wrote: »

When it comes to renewal time they shop around on your behalf as well,
quite impressed with my dealing with McCarthy insurance. I still check if their renewal quote is competitive when it arrives, and have been happy with it for the last two or three years.

+1 on McCarthy (who incorporated the broker we were with, Kavanagh). Always give a range of companies to renew with, have ended up recommending I change company every year to get the cheapest renewal (and they're always cheaper than the quotes I get when I call round the companies directly).

rickyjb

-Chris- wrote: »

What about the case where you'll normally get a cheaper quote by calling the insurance company than you will online, despite the fact that it'd be cheaper to do it all online rather than paying someone to take the call.

Any thoughts?

This is interesting, happened to me very recently. They tend to ask you "so what's the best quote you've received so far?" and even if the online quote they've given you is dearer they tend to be able to beat whatever you tell them very easily.

Maybe it's a way of getting the "lazy" people who just get a few quotes online, pick the best one and away they go (which is what I would've done up to recently).

I don't think I'd buy insurance solely over the internet again, more likely to get it cheaper by ringing.

johndaman66

oldyouth wrote: »

Your 'facts' are wrong then. A typical insurance broker will have access to 20+ products for motor insurance and will promote the best value to the client. Yes, some insurance companies will let out their products to a very select number of brokers and offer singnificant discounts to attract the brokers business, but those brokers still have access to the mainstream insurers.

I am going to agree to disagree with you on the above oldyouth unless you can provide me with concrete proof to the contrary. As I say I know of two bricks and mortar insurance brokers in my own small local town and they both provide insurance quotations on behalf of one insurance company only at any one time. You heard the ads for Nononsense.ie on the radio of late Im sure and at the end it mentions that Nononsense is a trading name of FBD Insurance PLC. There are more examples. I would form the opinion that an insurance broker worth their salt should have access to a broad suite of insurance products for their clients and it is fair to assume that this id the general purpose of insurance brokers but reality of the matter is apparently not the case, at least in the Repulic of Ireland.

maidhc wrote: »

On my last few renewals it has been cheaper to go through a broker than direct. In fact it has generally worked out better for me to be insured through Axa/Aviva through a broker than directly with the company.

Fair enough maidhc that was the case for you and I have acknowledged before now that such can often be the case but worth bearing in mind that it can often work out better to go direct to insurance company also.

housewrecker

hi guys, can anyone tell me if you can move to a different insurance company the same year you have a claim. we have just got our new premium following a claim for a leak in the house.our premium has doubled now because we have lost our no claims bonus.

oldyouth

johndaman66 wrote: »

I am going to agree to disagree with you on the above oldyouth unless you can provide me with concrete proof to the contrary. As I say I know of two bricks and mortar insurance brokers in my own small local town and they both provide insurance quotations on behalf of one insurance company only at any one time. You heard the ads for Nononsense.ie on the radio of late Im sure and at the end it mentions that Nononsense is a trading name of FBD Insurance PLC.

FBD is an Insurer and if Nononsense is a trading name of FBD it means they are not a broker, so your example doesn't make much sense.

I'm not going in to the legal technical descriptions but there are 3 types of firms that can act on behalf of clients with insurers. They are Tied Agents, Intermediaries and Brokers. Your small local town suppliers may fall in to the 1st two categories

On a side issue, I love your link from "concrete proof" to "bricks and mortar". All it was missing was to say that my post was without foundation

finnegan2010

Bizarre thing is I was looking for a quote for a family car....
My dad gave me the number of a broker he knew Years, RING HIM HE WILL GET YOU A GREAT DEAL

Got my quote from the broker thought ok seems a bit steep. Rang Quinn direct on a whim . Quinn blew the broker out of the water by about 250.
Bizarre I allways wondered the same OP !

oldyouth

finnegan2010 wrote: »

Bizarre thing is I was looking for a quote for a family car....
My dad gave me the number of a broker he knew Years, RING HIM HE WILL GET YOU A GREAT DEAL

Got my quote from the broker thought ok seems a bit steep. Rang Quinn direct on a whim . Quinn blew the broker out of the water by about 250.
Bizarre I allways wondered the same OP !

But perhaps a different broker could have blown Quinn out of the water by even more?

maidhc

johndaman66 wrote: »

Fair enough maidhc that was the case for you and I have acknowledged before now that such can often be the case but worth bearing in mind that it can often work out better to go direct to insurance company also.

Absolutely. Only thing I know about insurance is you need to shop around and get as many quotes from as many places as possible.

finnegan2010

oldyouth wrote: »

But perhaps a different broker could have blown Quinn out of the water by even more?

Perhaps i could have blown another broker, perhaps, perhaps, perhaps

Anan1

-Chris- wrote: »

What about the case where you'll normally get a cheaper quote by calling the insurance company than you will online, despite the fact that it'd be cheaper to do it all online rather than paying someone to take the call.

Any thoughts?

I'd say it's the old story, those who don't negotiate subsidize those who do.

johndaman66

oldyouth wrote: »

FBD is an Insurer and if Nononsense is a trading name of FBD it means they are not a broker, so your example doesn't make much sense.

I'm not going in to the legal technical descriptions but there are 3 types of firms that can act on behalf of clients with insurers. They are Tied Agents, Intermediaries and Brokers. Your small local town suppliers may fall in to the 1st two categories

On a side issue, I love your link from "concrete proof" to "bricks and mortar". All it was missing was to say that my post was without foundation

Well then buster, grand for you to say I'm wrong yet you do not verify your initial claim either? The onus is for me to prove out my claim only??;)

oldyouth

johndaman66 wrote: »

Well then buster, grand for you to say I'm wrong yet you do not verify your initial claim either? The onus is for me to prove out my claim only??;)

Which you haven't done. You just made a statement about some 'brokers' in your area and referred to an Insurer (Nononsense.ie) as being a broker also.

johndaman66

oldyouth wrote: »

Which you haven't done. You just made a statement about some 'brokers' in your area and referred to an Insurer (Nononsense.ie) as being a broker also.

And still awaiting your documented proof also my friend...

oldyouth

johndaman66 wrote: »

And still awaiting your documented proof also my friend...

Your bricks and mortar chapie is a Tied Agent (if he is selling only one company's product). probably best explained here http://www.msol.co.uk/main/h1070.htm

Those that offer a range of insurers broducts are Brokers

johndaman66

oldyouth wrote: »

Your bricks and mortar chapie is a Tied Agent (if he is selling only one company's product). probably best explained here http://www.msol.co.uk/main/h1070.htm

Those that offer a range of insurers broducts are Brokers

They both call themselves insurance brokers all the same though. You are correct in that these guys are tied agents in reality but I'm also considering the fact that they call themselves insurance brokers. It is highly deceptive in that they have Insurance broker up outside their door or describe themselves as such in the yellow pages listing but in reality are acting on behalf of one or at best a small number of insurance companies.

oldyouth

johndaman66 wrote: »

They both call themselves insurance brokers all the same though. You are correct in that these guys are tied agents in reality but I'm also considering the fact that they call themselves insurance brokers. It is highly deceptive in that they have Insurance broker up outside their door or describe themselves as such in the yellow pages listing but in reality are acting on behalf of one or at best a small number of insurance companies.

You should report them to the Financial Regulator is they are advertising as being Brokers IF they are actually Tied Ageents

johndaman66

oldyouth wrote: »

You should report them to the Financial Regulator is they are advertising as being Brokers IF they are actually Tied Ageents

Might be a plan alright, not enough hours in the day for me at the moment! I know that one in particular only provided quotes on behalf of two insurance companies at one point in time anyway so I suppose they would have being technically an insurance broker but not a very good one in the sense of the word do you think?