One of the most common questions about insurance is "Why do I need a broker? Why not cut out the middle man and deal with the insurers directly?” Here are seven reasons to make you rethink that being a smart idea.
You don’t know anything about insurance
"As transport operators many of us have been brought up in the industry and all we know about insurance is that if something goes wrong someone will pay you some money," says Gallagher National Head of Transport Roz Shaw.
"It’s not your core business so you may as well just go and buy a policy from an insurance company. But the company isn’t there to help you get it right, to make sure that the policy covers what you need it to, they’re there to make sure you buy their premium."
An insurance broker can help you interpret and understand the myriad insurance terms, concepts and documents that you’ll come across, she says. "And they’re more than just translators: they’re experts with deep technical knowledge of products, markets, policies and processes too. If you don’t know anything about insurance, an insurance broker is one of your best assets."
You think you’re paying too much for your insurance
Think you’re paying too much for your business insurance? An insurance broker is someone you need to get close to, who can be your partner in business, and they will find out what they need to know about your operation to get the right cover at the right price.
"Not only will they be able to help you understand what the cost of your insurance should be, they may even be able to save you money by negotiating a more competitive price on your behalf ‒ because insurance brokers have relationships with a range of insurance companies and can access policies and rates that may not be available to most consumers," Shaw points out.
"And if something happens and you need to make a claim they can help with that too."
Your organisation has a complex risk profile
Many businesses just need to insure their building but transport operations are usually much more involved: your load insurance, pollution and clean-up, freight and subcontractors add more complexities, and you probably need cyber insurance and workers’ compensation as well.
Complex operations need an insurance broker. Why? Because identifying and mitigating a complex set of risks takes skill and technical expertise. An insurance broker can:
- identify and assess the full range of your risks and exposures
- advise you on the best insurance solutions available to help you manage those risks
- help you predict, manage and reduce emerging or future risks.
Your business requires tailored or specialised insurance policies
If your business has a complex risk profile, it’s likely that you require policies tailored to your business’s needs. This is not something you should attempt by yourself. Transport operators don’t have the expertise to write policy wordings.
"Don’t rely on an insurance company to get it right on your behalf," Shaw warns. "An ‘off the shelf’ insurance policy may not cover all your risk exposures. You need someone who is going to take an interest in your set-up and operations, and you need to be open and honest about carrying freight, dangerous goods, or having different types of vehicle combinations, for example – or you may wind up with no cover for your type of business."
"I know what you’re thinking: I’m just trying to sell you more policies and make more money," Shaw jokes, "but the facts are that Australian businesses are underinsured compared to their counterparts in the United Kingdom and the United States." Underinsurance is particularly widespread among small and medium-sized businesses in Australia.
Not sure if you’re underinsured? Ask yourself:
- Do we have cyber insurance?
- If we were unable to trade for a period of time, would the business survive?
- If our premises were destroyed in a disaster, could we afford to rebuild?
If you answered no to any of these questions, it’s possible that you’re underinsured and need an insurance broker to help you identify and address any gaps in your coverage. A lot of the additional policies you might need won’t necessary cost you more money.
You need help with premium funding, risk management, claims, or more
Premium funding is an option that sometimes gets overlooked because everyone assumes that you just go to the bank, Shaw says, "but quite often a broker can organise premium funding cheaper than a bank and offer flexible terms as well if you need to spread the cost of your insurance policy".
A broker can also help with risk management reviews, and assessing your company’s risk identification and mitigation strategies in order to ‘sell’ your risk to the insurance company to get the optimal terms possible.
This kind of service and expertise also comes into play during the claims process, when your insurance broker is your number one advocate. And transport operators need someone in their corner because we’re high maintenance: it’s not a case of if we need to make a claim, but when, and claims history can prejudice insurers, whereas as long as you work with them a broker is going to go in and bat for you.
You don’t have time to research and arrange your own insurance
Arranging the right type and amount of cover for your business takes time and skill to evaluate all your current and future risk exposures, find the best available policies on the market and negotiate rates with insurers.
"Who’d want to do that?" Shaw asks. "Transport is a lot more fun than sifting through insurance policies. So why don’t you pay an insurance broker to do the boring work?"
Gallagher provides insurance protection to businesses of all sizes, from sole operators to some of the world’s most iconic brands. Talk to a Gallagher transport and logistics team insurance specialist in your area.
Gallagher provides insurance, risk management and benefits consulting services for clients in response to both known and unknown risk exposures. When providing analysis and recommendations regarding potential insurance coverage, potential claims and/or operational strategy in response to national emergencies (including health crises), we do so from an insurance and/or risk management perspective, and offer broad information about risk mitigation, loss control strategy and potential claim exposures. We have prepared this commentary and other news alerts for general information purposes only and the material is not intended to be, nor should it be interpreted as, legal or client-specific risk management advice. General insurance descriptions contained herein do not include complete insurance policy definitions, terms and/or conditions, and should not be relied on for coverage interpretation. The information may not include current governmental or insurance developments, is provided without knowledge of the individual recipient’s industry or specific business or coverage circumstances, and in no way reflects or promises to provide insurance coverage outcomes that only insurance carriers’ control.
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