ARE YOU REALLY BETTER OFF GETTING INSURANCE THROUGH A BROKER?
Insurance has become part and parcel of all aspects of life. You need insurance for your health, your business, your home, your car, your future, name it. While the vitality of insurance isn’t questionable, it is often confusing what route one should take to acquire their insurance cover: directly through the insurance company, through an insurance broker or through insurance agents. By the end of this article, you will know if you are better off getting insurance through a broker.
But before we get ahead of ourselves, let’s find out who an Insurance Broker is and what role they play. In a nutshell, an Insurance Broker primarily represents the interests of an insurance seeker on matters of insurance and risk. Ms. Linah Sebunya, the CEO of Kenbright Uganda – a leading insurance brokerage firm has this to say. “As an Insurance Broker, I am essentially the intermediary between the insurance buyer and the insurance company. We are responsible for ensuring that the consumer gets an insurance policy that offers sufficient cover for their risk”. It is important to note that Insurance Brokers are licensed to work with all insurers in the market.
So, what is the standard payment formula for Insurance Brokers for their professional services? The answer to this question may be baffling. Despite the fact that an Insurance Broker represents the interests of the consumer, by law, they aren’t allowed to charge their clients payment for their services. They instead earn brokerage commissions from the insurance companies for all the insurance business they bring in. This is stipulated in the Insurance Act 6, 2017.
Since we have established that an Insurance Broker is mainly at the client’s service, we can now delve deeper into what they do. One of the cardinal roles of an Insurance Broker is to offer free advisory services to the client on all matters concerning insurance. Risk advisory is a crucial role that an Insurance Broker plays as Mrs. Carol Athiyo from Minet, an Insurance Brokerage giant in Africa explains: “When it comes to risks of huge magnitudes, an Insurance Broker helps to spread these among many insurance companies. This is to alleviate the dangers of concentrating a huge risk with one insurance company. Spreading it to different insurers is crucial for sufficient risk mitigation.”
An Insurance Broker thoroughly assesses the risk at hand to come up with comprehensive policies in the best interests of the insured. The Insurance Broker plays a big role here as he/she seeks to secure an insurance policy with sufficient coverage. Here the Insurance Broker’s extensive knowledge of the insurance industry and the products comes in handy. According to Mr. Christopher Bakesiga, the Business Manager of the Insurance Brokers Association of Uganda (IBAU), brokers help the client to select the best-suited insurance policy.
An Insurance Broker then helps the insurance seeker to choose the right insurer (insurance company) in line with their insurance need. The choice of insurer directly depends on the insurer’s underwriting capacity and the appetite for the risk in question. What an insurance broker therefore does, is source insurance quotations from different viable insurers. But it doesn’t stop there. Mr. Bakesiga told us that Insurance Brokers help the client to analyze the different quotations from the insurance companies. “They ensure that the client makes an informed decision on which insurer to go with” he added.
You are excused to think that having secured the insurer, the insurance policy & negotiating with insurer, the Insurance Broker’s job is done. You may therefore be surprised to know that in case of occurrence of a loss, an Insurance Broker is involved in guiding the client through the insurance claims requirements and procedures to ensure that the claim is promptly & satisfactorily settled by the insurer.
Given the huge role Insurance Brokers play in the Insurance cycle, it is befitting that they ought to have some sort of regulation. And they do. Their operation is regulated by the Insurance Regulatory Authority (IRA). They also have an umbrella body – the Insurance Brokers Association of Uganda (IBAU). Mr. Bakesiga put it simply that the association solicits for insurance brokers’ conducive working environment while also playing a major role in growing the general uptake of insurance in the country.