Top 5 Reasons Why Consumers Should Use an Insurance Broker
Consumers generally think they benefit when they buy insurance direct, but is it true?
To find out, one group of researchers asked people what matters to them when buying insurance, and in turn the research panel used those criteria to evaluate the differences between buying insurance via a broker and buying direct online.
Why do consumers hate the middle man?
Primarily, customers perceive any middle man as an unnecessary third party, and conventional wisdom dictates that this means additional cost and possibly mistakes. Advertising by many insurers to ‘go direct’ has compounded this feeling.
What is important to consumers?
In order of importance, these are the things people said matter to them:
- Cost
- Ease
- Speed
- Peace of mind that everything is covered.
- Security of personal data.
So let’s now analyze these items and let the research panel judge how each performs when insurance is bought directly or when through a broker.
- Cost
Contrary to popular consumer belief the panel found that broker pricing was actually better than direct insurance pricing.
The reason for this seems to be principally due to insurers providing different rates to brokers, in order that premiums are lower. Why would insurers provide special broker pricing? Simple: because the risk is lower for the insurer. Brokers are professionally trained to choose the right policy for their customers, and not to under insure, therefore avoiding unnecessary claims while maintaining the correct premium income.
‘Cutting out the middle man’ it seems, does not save money this time. On the contrary!
- Ease
Many of the consumers in the research panel’s test case were surprised here. At least half began their test with the impression that buying policies direct from the Carrier would be the easiest option for them. After trying both, almost all had changed their mind.
While the online experience usually proved more pleasant than the phone, most brokers offered an online service, and were far, far more pro-active after they received the initial quote request from the consumer, often answering queries by personal email or call and helping to reassure customers with a human service. Furthermore, most direct services completely fell down when queries or changes were required that were less common, particularly later in the policy life cycle. Brokers really shone through here.
- Speed
The results here were quite evenly balanced. In the case of the time taken to generate initial quotation figures, direct services (online) were consistently very quick, while some brokers answered quote requests by personal follow up.
The difference however was somewhat reversed when it came to mid-term changes, documentation requests, and unique or difficult questions. The direct services often fell back to large call centers whose staff had little or no real insurance knowledge. In these areas brokers were more efficient, making suggestions the consumers found highly useful, saving them lots of time.
On balance, the speed at which quotes were produced by the direct services was not significant to the consumers when compared to the speed and efficiency with which brokers generally managed their policies throughout the policy life cycle.
- Peace of mind that everything is covered
The research panel saw few surprises here. Brokers were largely far more efficient at cross checking policies than consumers, and also very good at educating their customers, explaining what types of coverage were available and answering questions.
Direct processes were better than in the past but put too much focus on the consumer to do this work himself/herself to be able to compete with the level of service provided by brokers.
The really good direct services centered on only covering the low risk policies, and leaving any consumer with non-standard requirements high and dry.
- Security of personal data
This was a difficult one to test, and fell largely to the panel’s technical team. They did however take into account how consumers felt about their data security after using the various services.
In the case of Internet-based services, the direct services tended to follow security guidelines marginally better than broker services, mainly due to the size of the organizations involved and lack of good software on the part of some brokers
On the phone however, the researchers saw a different story. Brokers, being far better equipped to deal with specific insurance questions and used to a human discussion, gave people a stronger feeling that they were in safe hands. The process of securing personal data was much the same as with direct, but the trust conveyed by brokers was better.
As a side note, here at Morning Star Insurance Agency Insurance Services, we are dedicated to keeping your personal data secure by using the most sophisticated and up-to-date management information systems, so you can rest be assured your information is safe with us.
Summary of Results
So who won? Broker or Direct?
- [Broker]
- [Broker!]
- [Broker, though people admitted they were heavily biased due to point 2.]
- Peace of mind that everything is covered. [Broker]
- Security of personal data. [Broker]
Conclusion
We set out in this article to discuss the general perception by consumers that ‘going direct is better’, for the benefit of consumers and brokers on the whole.
While the research panel didn’t test every website and every class of insurance, the results with their test users were conclusive.
Conventional wisdom usually dictates that the middle man offers little to the discussion and always has his price. But in the complex world of insurance, perhaps things are not so simple, and after seeing the results of the research panel, we are now more certain than ever that using an insurance broker today is more important than ever.
Our recommendation to you would be to trust us, Morning Star Agency Insurance Services, as your broker and let us shop for you, and find you the best possible coverage at the lowest price. For a quick quote, please complete the information in the Quick Quote box at the top of the page, or give us a call at (949) 833-2030. We’ll be more than happy to discuss your insurance needs and get you covered!
