KEEP UP TO DATE WITH ALL THE IMPORTANT COVID-19 INFORMATIONCOVID-19 RESOURCE PORTAL
FANews
FANews
RELATED CATEGORIES

Insurance Brokers are an essential part of any successful economy

28 July 2006 Guy Jameson

The need for insurance is an essential element in the operation of all economies throughout the world today. Insurance enables businesses and individuals to transfer most of the risks they face in a cost effective manner by providing an effective risk transfer mechanism.

Guy Jameson, Executive Leader of Business Development at Alexander Forbes Risk Services said that the efficiency of the transaction as well as the cost effectiveness, in both the short and long term can best be achieved by utilising a broker.

Jameson said that recently there had been intense debate in respect of the value of using brokers instead of placing insurance direct with insurers. Brokers, according to Jameson bring a wealth of experience and expertise in assisting their clients with putting in place a strategy to deal with the exposures a client has, and then assisting with the retention, placement and risk management strategy.

In many cases companies do not have the requisite expertise and skills needed to determine the best way to deal with a specific risk and the consequences thereof. Often buying insurance cover is not the solution but rather a well thought out retention strategy along with a physical risk management programme, together with an element of insurance cover. All clients have differing risk profiles and therefore a well devised strategy put together in conjunction with your broker will lead to the optimum solution, which in the long term can yield real results.

Brokers also help clients understand the insurance contracts that they enter into with their insurers, as well as provide detail of what is in fact covered as well as what is not.

The global insurance market is an ever-changing one and what is market practice today can be outdated tomorrow. You need to be involved on a day- to- day basis to have any chance of staying abreast of market developments. The risks that we all face are also becoming more and more severe and sophisticated and the erroneous assessment of the risks we face can have very dramatic consequences.

A further development in the broking industry has been the establishment of industry sector practice groups by brokers, which create an even more specific area of focus and expertise within the broking firms. This has, in many instances, led to a complete re-appraisal by clients of how to treat their risk exposures in their sector.

Jameson also makes the point that the selection process involved in choosing your broker is also important. Some of the questions a client should consider in choosing a broker are:

* Do they understand my industry and business?
* Do they have a client base in my sector?
* Will my business be important to them or am I too small to attract attention?
* Am I confident that they have the depth of resource and quality of staff to deliver what they promise?
* Do they have a track record of an ability to efficiently handle large losses?
* Do they have the ability to advise on alternative risk transfer strategies?
* Do they have the ability to advise on physical risk management programmes as well as the resource to implement them?
* Do they have a track record of innovation and are they winning new business in my sector at the moment?
* Does their team have continuity and sufficient technical support?
* Have they understood our needs?
* Are they reliable? Responsive?

Within a South African context the client also has to consider whether the Broker has the BEE rating and credentials to make them a serious part of the Industries effort to transform itself. Obviously this will be easily determined in terms of shareholding and compliance with legislation but the real test is whether there are visible efforts to build capacity in an industry which still has a lot to achieve in this area.

The correct use of the brokers influence in the insurance market can ensure that client interests are always paramount and handled with the important focus they require.

Brokers ensure that clients can make informed decisions on how to deal with the risks they face and then work together with their broker to achieve the best result, he concluded.

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
fanews magazine
FAnews June 2022 Get the latest issue of FAnews

This month's headlines

A free smoothie does not make a loyal customer
Consequential loss policy court cases
Everything you need to know about death, disability and severe illness cover post-emigration
Are advisers doing all they can for clients’ portfolios?
Financial advisers need help - navigating the complex ESG fund environment
Subscribe now