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Direct players woo the broker channel says CIB

25 July 2006 CIB Insurance Solutions

The world market has found that once direct companies open their doors, there is a certain swaying of the short-term insurance market towards them.

However, once clients have experienced this distribution channel, they tend to swing back towards using the traditional broker.

This is according to Douglas Donnelly, CEO of CIB Insurance, who says that once this has happened, and the direct market reaches saturation point, even the direct players try to crack the broker market by offering their call centres to differently branded sister companies that use the broker channel.

"What would really amaze me," he says, "is if brokers fall for this. For years the direct players have been calling brokers fat cats and totally redundant members of the short-term insurance sector. To now be touting for their business is not only hypocritical but totally ludicrous."

When citing the benefits of going through a broker, Donnelly says when you deal directly with an insurance company through one of its call centres, they can only offer you their particular products and prices. We believe this does not offer the consumer the best possible value.

"An independent insurance broker represents a number of different insurance companies, who offer different products and prices. This provides several options to allow the end users to choose the best value for their particular insurance requirements. It also encourages healthy competition in the marketplace."

He says the broker's role involves selling products on the insurer's behalf, assisting in providing data for underwriting, keeping records and most importantly providing professional and objective advice. "We all use professionals to do our tax returns, balance our books and suchlike," adds Donnelly. "Why should buying insurance be any different? A broker offers years of experience, which is invaluable, especially with the new, very strict financial service regulations."

Although users can purchase insurance over the telephone in three minutes, brokers offer a human touch that cannot be matched by direct insurers. By dealing direct with one insurer only one product can be offered, how can that be deemed best advice? The salesperson that sells the policy, will never deal with the customer again. In this way, policyholders do not feel like a real person is really helping, listening or understanding their needs.

In terms of pricing, Donnelly says direct insurance companies are not necessarily cheaper, and the promised savings of 20% by direct insurers is not an accurate figure. In addition, he says that brokers fees are fully disclosed and properly structured, ensuring a culture of transparency.
"Brokers also have the added benefit of bulk buying, and are therefore able to put pressure on an insurance company, if needing to fight on a clients behalf."

"The professional broker is a specialist in his field and will at all times service the client regarding any claims or discrepancies. Price wise, I believe intermediaries are every bit as competitive as direct insurers, yet offer a service that cannot be matched by them," he concludes. "This is why CIB deals only through brokers."

Quick Polls

QUESTION

We have watched with interest as each of the country’s large life insurers report their 2021 life claims statistics, with soaring claims and claims values. That got us thinking: how do the big life insurers compare against one another, from an IFA perspective?

ANSWER

An insurer is an insurer is an insurer
All are excellent: would not deal with them otherwise
There is one insurance brand that stands out for me
Tied agent: but my brand is the best out there
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