What is an insurance broker and why use one
Before comparison sites like us made life simple, you’d have to spend valuable time asking individual insurers for quotes or using an insurance broker to do it for you.
You can still use brokers today, but unlike price comparison sites, they charge for their services so you’ll need to bear this in mind. Here’s a closer look at what insurance brokers do.
What is an insurance broker?
Brokers help find insurance policies to suit your needs. They don’t provide cover themselves but act as a bridge between you and the insurance company.
Insurance brokers tend to specialise in certain areas – for example car cover or business policies. Some may cater for even more specific needs, for instance classic cars, imported cars or commercial property insurance.
If you use a broker, they’ll ask you what you need and take into account your budget. They’ll then use their contacts and knowledge of the insurance market to find a policy that ticks all the boxes.
Be aware that insurance brokers aren’t the same as insurance agents. Brokers act on your behalf and agents work on behalf of a particular insurer.
How do insurance brokers get paid?
Brokers charge for their services and set their own pricing structure – this could be an overall fee or a fixed cost for each policy you buy. You should also be aware that there might be an initial consultation fee too.
Some brokers may also earn commission from the insurer you buy a policy from.
Should I use an insurance broker?
It’s up to you whether you use a broker or not but you should always make sure you read any terms and conditions they give you and check the pricing structure they work to.
When it comes to choosing a broker, recommendations from friends and family is always a good place to start. If you can, ask a broker for testimonials or references (most will be all too happy to help put your mind at rest).
Who regulates insurance brokers?
Insurance brokers are authorised and regulated by the Financial Conduct Authority (FCA).
Brokers can also join British Insurance Brokers’ Association (BIBA), who work to create fair and effective insurance services for people working in the industry as well as their customers. BIBA members must also agree to a code of conduct.
Taking the time to check a broker is authorised and regulated can help you avoid ghost brokers – insurance scammers that sell fake or invalid policies.
How to become an insurance broker
You’ll usually be able to find entry level roles at insurance broker firms and some may also offer apprenticeships. Larger firms may ask you to specialise in a particular area while a smaller company is likely to give you more all-round experience – which can be beneficial if you’re not sure about what to specialise in.
Different firms will have their own qualification requirements but you should have a keen interest in finance or financial services – as well as enjoy meeting people and building solid working relationships. For more advice on how to become an insurance broker, head to graduate careers website, Prospects.
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