How Should You Spend Your Money

27. 06. 2008 posted in: Car Insurance News 2008

Insurance Broker or Direct Insurance Underwriter

The insurance broker model has been around for decades but is it time to move to a new model that has been instigated, tried and tested by the price comparison companies.

Whenever a 'broker' is involved commissions apply which effectively means an element of what you pay in premium costs is allocated to the broker you bought the insurance through, obviously commission elements also apply to the insurance aggregator too.

The implications of the price comparison sites have effectively created another possibly more cost effective tier of the insurance broker model however the current structure means the price comparison companies are working directly with the brokers who currently make up their insurance aggregator panels.

The question of logic now is, why on earth if direct insurers are happy to deal with buy online situations do we need a possibly antiquated broker system stuck in the middle of this process that is effectively costing us more money.

Many brokers will no doubt argue they offer administrative services but our experience says even these are starting to twindle as many brokers farm out some of the more important customer service elements, such as the claims process - we are finding that more and more solicitors firms are actually taking on the claims processes directly from the brokers in order to capture the lucrative compensation and vehicle hire elements, in return offering commissions back to the brokers.

Technologies have now advanced far enough for the major price comparison companies panel of insurance providers to actually be made up of the insurance underwriters themselves so why in this age of ever increasing costs are the paying public expected to fund any unnecessary tiers.

The other ever present worry with some brokers is their responsibility to maintain designated client bank accounts to accommodate monies they collect from the customer on behalf of the insurance underwriter. Whilst most brokers do maintain these client accounts correctly the money paid into them does in fact belong directly to the insurance company who ultimately underwrites the policy itself.

The advantage of completing your insurance online directly with the insurance underwriter means you can effectively cut out the middle men and ultimately as this model continues there will be enough cause to argue for cheaper insurance premiums.

This car insurance article has been provided by 'Article Feeder' from News Media Studios