You quite rightly expect that going to an independent insurance broker will give you access to the best prices. But how can you be sure that your insurance broker is genuinely acting independently? In the wake of the recent fine levied on insurance broker Bluefin, we examine what happened and how you can be confident that your broker is doing what they say they will.
Firstly, what happened at Bluefin?
Insurance broker Bluefin was recently fined over £4 million for over-charging customers. The firm had claimed to their customers that they were “truly independent.” This raised false confidence that any deals offered would be the best value picked from a wide range of sources. But a Financial Conduct Authority (FCA) investigation deemed that Bluefin had instead followed a business strategy that aimed to increase the business placed with its parent company AXA, rather than genuinely seeking the best price deals for customers. Bluefin was criticised for failing to implement systems that would disclose this policy. As a result, the FCA said that customers were misled into believing it was acting truly independently.
Commenting on the Bluefin fine, Mark Steward, Executive Director of Enforcement and Market Oversight at the FCA, said:
‘”Insurance brokers must promote a culture in which they act in their customers’ best interests and provide them with the information they need to make an informed decision. This is central to the relationship between the industry and its customers. It is also unacceptable that firms hold themselves out as independent when they are not.”
How to check if your insurance broker is genuinely independent
So how can you spot the sharks amongst the genuine independent brokers?
- Ask for references
- Make sure the firm you select is registered with the FCA. The FCA aims to ensure that financial services industry is run with integrity. It ensures that firms work in the best interest of their customers and provides them with appropriate services
- Look for a broker that is a member of The British insurance Brokers’ Association (BIBA)
- Ask what other accreditations they have, and what they mean
- You could also ask for a compensation disclosure statement. This can identify any clauses that suggest they may get an incentive for placing business with one or more insurance companies
What is the difference between an insurance broker and an insurance agent?
Insurance agents generally represent a single insurance company. They are the customers’ point of contact and may offer advice on what products and services offered by that insurance company, are most suitable.
An insurance broker does not have a contract with a specific insurance company, but is free to act as a link between their customers and any insurance company. They may specialise in different aspects of insurance to be able to offer their customers expert advice on the levels of cover available. This expertise helps them to ensure that the policy purchased does meet the specific needs of their customers.
Your insurance broker may state that they have ‘preferred broker’ status with one or more insurance companies. This means that they have close links with specific insurance companies, which can enable them to access reduced rates. The broker is still working independently and these preferential rates may or may not be the best value deal that they will be able to offer to you.
What are the benefits of using an independent insurance broker?
- Firstly, an independent broker works for you, the customer, not a single insurance company
- They have freedom to access and compare a wide choice of insurance products from a large number of insurance companies
- They can save you time by searching through the various products available and matching these to your need
- An independent broker will also be able to compare similar products from different providers. This lets you select the best price to save you money
- They are able to handle unique, specialist or harder to insure situations, which most comparison website cannot handle
- An insurance broker will normally have good contacts within the larger or specialist insurance companies. Large broker companies may also have ‘preferred broker’ status. This recognises their buying power and means they can negotiate hard to secure better prices for their customers
- And a broker will ask you questions to better understand your exact insurance needs. They can also look at other insurance products you have to make sure that you’re not paying twice for the same cover
- A broker has an expert understanding of insurance and knows exactly what options are available. If you go directly to an insurance company they may not always offer you every product available
- Your broker has the knowledge to offer you advice on the options available to ensure you only pay for what you need. As a result, they may also be able to give you additional related advice on risk management and security
- A broker can represent you if you need to make a claim. That means they willsort out the settlement on your behalf, which saves you time and hassle
- They can explain documents clearly to you, to ensure you understand what cover you are buying
- Generally, an independent insurance broker have their own professional indemnity insurance. This provides added reassurance that you’ll be financially covered if something does go wrong
- Finally, like comparison websites, an independent insurance broker makes money through a commission paid to them by the insurance company. That means you won’t need to pay them anything, but can still benefit from their expert advice and guidance even if you don’t take out insurance with them
Genuine independent advice for your peace of mind
If you’re looking for an independent insurance broker, speak to our professional team at Park Insurance. We’re a family-run business with a deep understanding of the various challenges and risks faced by our commercial and private customers. We’ve been helping our customers for 30 years from our base in Bristol by building bespoke packages that suit your specific needs and budget. That means you’ll get cover you can count on at the right price for you. Give our friendly team a call on 0117 955 6835 or get in touch for a free quote today.