So you’ve decided to use a business insurance broker for the first time. Congratulations!
If you’ve already decided that an insurance broker is right for you then you probably don’t need to hear about their benefits again, but there is no doubt that using a good one can benefit your business.
Once you’ve decided that using a broker is the right option for your business, the next step is to choose a broker. In this guide we’ll look at some of the factors to consider.
All Brokers Are Different
At first it’s easy to think that all insurance brokers do much the same thing, but in fact there are many differences.
Some brokers only specialise in certain types of insurance, such as domestic or business, and many brokers have differing levels of knowledge, experience and qualifications.
With this in mind, you need to understand the important of choosing a broker who is right for you and your business rather than choosing the first one that comes along.
Factors to Consider
There are a number of factors to consider when choosing a business insurance broker, and below we have listed some of the most important factors.
Qualifications and Licensing
Here in Australia all insurance brokers and adviser must be suitably qualified and licensed before they can provide any insurance advice to clients.
At a minimum your insurance broker should have a certificate IV in insurance broking, and preferably they should be at diploma level. For larger corporate brokers ideally they should be degree qualified.
Some insurance brokerages will hold their own Australian Financial Services Licence (AFSL) which allows them to provide advice and deal in insurance products.
Many insurance brokerages do no hold their own AFSL, and instead operate under the authority of another licence holder.
Operating under the licence of a larger AFSL holder is becoming more and more common in Australia due to licensing and compliance costs, and brokerages operating in this way should not be considered inferior to those holding their own licence.
As this is likely your first foray into the world of insurance brokers, it will probably be a good idea to ask any prospective brokers about how they are licensed. You can also find more information about licensing on the ASIC website.
Knowledge and Experience
This is perhaps one of the most important factors to consider when choosing your first insurance broker.
You need to find a broker with a level of knowledge and experience that is adequate for your needs, but also one who is willing to work with a new business that has never used a broker before.
It is also important to consider the type of knowledge and experience that the broker has. Someone may have twenty years experience in domestic insurance, but that might not mean they know anything about public liability or other forms of business insurance.
Most brokers will be more than happy to tell you all about their experience and knowledge, and increasingly you can find this information easily on their company website.
The specialist insurance broker has become more and more prevalent over that last decade.
Many brokers try to be all things to all people, but some brokers (and their clients) are seeing the benefits of specialising in specific areas.
It’s not uncommon for a broker to specialise in business insurance, but some brokers are drilling down further into specific industries. Common industries for specialisation include the medical and trades sectors.
If you are looking for a specialist broker the easiest method is to search Google for your industry + insurance broker. For example try searching for ‘medical insurance broker’ or ‘tradesman insurance broker’.
Using a specialist insurance broker won’t guarantee better service or advice, but in many cases a specialist will have a better understanding of your industry which should result in better outcomes for you and your business.
There are plenty of other factors to consider, and one of those is the simple question of whether or not you get along with the broker.
Depending on the type of business you run you may find yourself having a fairly close working relationship with your broker, so it’s important that you can work with them on an ongoing basis.
Whilst you don’t have to be best friends with your broker, you do need to feel comfortable with them, especially considering the amount of information that you will have to provide them with about your business.
Choosing a Broker
There’s no doubt that using a broker can lead to better insurance outcomes for your business, but it’s important to choose your first broker carefully to get the most out of the relationship.