Protecting our homes, our businesses, our health, and our property are some of the main concerns that play on hard-working people’s minds from day to day.That’s why having insurance is essential in so many aspects of our lives.
Keeping expenses at low cost, with maximum benefits, is the ideal situation, and this is where insurance brokers come in.
One of the hurdles towards getting people to buy insurance is the public’s less-than-stellar perception of the industry.
As such, it is up to insurance professionals to prove these myths wrong and foster the public’s trust in the industry despite the actions of some ‘bad apples’.
There are many benefits to using a broker, but these can often be overshadowed by a few common myths and misconceptions.
Below see the below list of myths and misconceptions about insurance brokers.
#1: Brokers are Not Insurance Experts
As a matter of fact, brokers are experts in risk assessment. We can:
- Identify specific risk factors and give advice to clients on steps they can take to reduce their risk before requesting a quote or buying a policy
- Correctly value risk factors, then shop around accordingly; some insurance companies place a premium on certain risk factors, and brokers know how to navigate the insurance industry’s complex landscape
- Recommend policies and products designed to close coverage gaps
- Submit updates that could change your risk profile and help you qualify for lower premiums
#2: Brokers always cost more money than going directly to an insurance carrier.
This myth is untrue for a couple reasons, the main being how insurance carriers work with brokers.
In order for a broker to sell a certain brand of insurance, they must first be appointed by the insurance carrier. Admitted carriers appoint certain broker agencies to sell their coverage, usually based on the broker’s track record of selling insurance.
Once appointed, the insurance carrier offers a commission rate for policies the broker places with that carrier. This rate is similar when compared to the commission rates paid to their in-house sales staff for going to straight to the carrier.
From this process, the carrier benefits by having a new business channel that doesn’t require payment to in-house sales staff. Benefits for the broker include having another insurance carrier to compare client rates with, so that they may be able to switch their current clients to the new carrier for better rates and coverage.
The end result is that the client receives the personalized service of a small agency, while still enjoying the benefits of an insurance carrier’s policy.
#3: They Don’t Give Good Advice.
False! In fact, insurance brokers are highly qualified to advise clients on insurance matters, it is what we are trained for. Insurance agents for a single company, however, can only provide you with general information on their specific products. For example, we can help you pick the right insurance for your precise type of requirements, or we can aid you in selecting the proper insurance to meet your needs. Only a broker is trained to make sure you are receiving the right products for your coverage needs.
#4 Premiums are lower when commissions do not have to be paid to brokers.
Insurers not dealing with brokers often have substantially higher advertising budgets and these budgets are used to promote their products. Companies using brokers use this money to pay the broker commissions. Their advertising budgets are lower because the brokers promote the products on behalf of the insurance company. In addition, the advice and assistance of a broker will make sure that you are correctly insured – it’s usually when you need to claim that the value of this advice becomes really important
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