Insurance is essential to protect your business and its assets, from your premises and equipment to the health of your staff. But what’s the best way to decide which insurance products to buy and what levels of coverage you need?
With online tools and other such resources it’s certainly becoming easier to get an overview of some of the options available, but that doesn’t mean the decision is any easier to make. In fact, interaction with professional brokers is perhaps needed now more than ever to work through the complexities of corporate insurance and private health insurance needs.
Yet a 2013 survey by IBM found that worldwide only 14% of consumers shopping for personal insurance bought it through a broker. This had more than halved from 34.4% in its 2010 survey, which also revealed that most people use at least three different points of interaction when deciding which insurance to buy.
That said, the UAE is very much a broker-led market, especially on the corporate front, with over 150 registered brokers in the country. And while figures of broker usage among companies as an overall percentage are hard to come by, a look at stats from the British Insurance Brokers’ Association (BIBA) can give us a perspective of sorts, revealing that insurance brokers still arrange 78% of commercial insurance in the UK.
That said, the UAE is very much a broker-led market, especially on the corporate front, with over 150 registered brokers in the country.
It’s important to understand why this is. Just what value add does the broker bring to the picture? There are indeed a lot of angles to consider, and it will vary based on whether you are exploring options for personal coverage or corporate. Taking it a step further on the corporate side, how big is your company? Startups, for example, which are currently flooding the UAE market, may find that certain HR functions often filled by the broker take a great deal of pressure off the business and hence the business owner.
We’ll explore each customer profile in closer detail in future articles. For today, the first article in our “insurance broker versus insurance provider” series, we’ll start by taking a more general view on why it is best to work with an insurance broker to meet your specific insurance requirements.
1. Personal attention: An insurance broker will take the time to discuss your needs and priorities, building up a deep understanding of your business or personal requirements so they can tailor a package of insurance products to suit your company.
For example, depending on your business strategy, achieving the lowest possible price might be outweighed by the need to find exactly the right cover. Just 60% of SMEs canvassed in a 2012 study by Datamonitor rated price as an important factor when choosing insurance.
When you deal with a broker, you will generally have a single point of contact who will be keen to develop a close relationship with your business so they can meet your needs as effectively as possible through a deeper understanding of just what it is you require.
In contrast, when you go direct to an insurance provider, although you should expect to get excellent service as well, you have to be aware that the provider is of course going to be tied to their own products. This makes it very difficult if not impossible to receive the unbiased advice a broker delivers – and so “personal attention” means something very different when coming from a broker versus a provider. Brokers represent many providers and hence do the work to make sure the product and services match the needs and wants.
A 2012 US study found that 88% of small group health insurance purchased by SMEs was arranged through an intermediary such as a broker. The researchers put this down to the invaluable personalised attention they provide, which helps small business owners cut through the confusion.
2. Access to a broader range of insurance options: Building off of point 1, Insurance brokers are experts in the market and can represent products from a range of providers. This puts them in a strong position to match your needs with the most appropriate insurance policies and work out the levels of cover you need in order to be fully protected.
If you have unusual requirements, you might find that using a broker is the only way to obtain the exact coverage required. Brokers may have access to policies that providers don’t offer directly to clients, and they can also tailor standard policies to suit your specific requirements.
You can depend on an experienced broker to design a suitable package of insurance products for your business, negotiate terms with providers, and put the appropriate levels of cover in place for you.
3. A view on long-term service: Part of the insurance broker’s job is to inform you of the quality of service you will receive from different insurance providers.
And while this in no way is to suggest that insurance providers do not in general provide a good service, without the guidance of a broker you will struggle to get an appreciation of just what the long-term picture will be like working with this or that insurance provider.
This again stresses that the considerations go far beyond just coverage and price. You need to know if the insurance provider has a track record of great service. Does the provider, for example, actually make it easy for customers to make claims? Some in fact make it very difficult.
Does the provider, for example, actually make it easy for customers to make claims? Some in fact make it very difficult.
As part of that unbiased service provided by a broker, you should get a clear idea of the provider service levels due to the experience gained by the broker in working with them over the years. It is an absolute key pillar the broker brings to the table when attempting to put together the right insurance coverage for you.
4. The right insurance and the right amount of insurance: A key part of a broker’s role is making sure that each customer has all the insurance they need with the appropriate levels of cover. After taking the time to understand your business and your risk profile, they will put together a suitable mix of products with the right levels of coverage at the best possible prices.
A study carried out in 2015 by Aviva found that one in five SMEs were not confident that they had the right insurance coverage. Being underinsured could be a serious matter when it comes to making a claim. You may even find that the provider will refuse to pay out at all if it turns out that your coverage was not adequate.
By using a broker, you can be confident that you’ve got an accountable expert in your corner who will do their best to make sure the coverage you need is in place.
5. A strategic approach to renewals: A broker will be able to analyse your existing policies and claims where data is available and show you what’s driving your insurance costs so you can make changes to address the causes.
With health insurance, for example, they will essentially do an audit to highlight any key areas where employees’ claims have focused over the past year. This will help them recommend the most appropriate policies and levels of coverage for the coming year.
If you’re struggling with escalating premiums, they may be able to propose strategies to bring them down. For example they might suggest making certain aspects of health insurance optional and inviting employees to pay a little extra if they want to take advantage of them, or adding certain endorsements or riders to amend policies.
6. Help in the event of a claim: Dealing with insurance claims can be stressful and time-consuming. This is where some brokers (and to be clear, not all of them do) go the extra mile – and in the process make your life a lot easier.
Brokers often can take the pressure off you by liaising with the claims department and loss adjusters on your behalf and keep up the pressure to make sure your claim is handled as swiftly as possible. Plus, with their expertise, they will be able to help you secure the best possible payout.
In a 2013 study by BIBA, 72% of brokers said they had overturned a claim rejection by an insurer in the past year and 69% had secured at least one increased claim payment for a client. Meanwhile, 43% said they regularly negotiated claim payments by between 11% and 20%.
In a 2013 study by BIBA, 72% of brokers said they had overturned a claim rejection by an insurer in the past year and 69% had secured at least one increased claim payment for a client.
Choosing the right insurance broker for your business
When you’re choosing an insurance broker, check the rules in your country to see if there’s a body that registers, licenses or regulates brokers, then make sure you choose one who complies. In the UAE, brokers must be registered with the Insurance Authority, and if brokers are selling health insurance in Dubai or Abu Dhabi they need to adhere to the DHA and HAAD regulations.
If possible, look out for a broker who promises to go above and beyond. They may be able to advise you on ways to influence your employees’ behaviour to minimise future claims, for example by implementing a workplace wellness scheme and educating staff in appropriate use of health benefits. They may also be able to provide services such as risk management, tailored to suit your business.
In the end, you are always aiming to get the best for your company. When choosing insurance, partnering with a broker can mean you find yourself with a valuable ally in that quest.