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Insurance Company

For many members of the public there is a complete misinterpretation as to the where they get there actual insurance cover from. Many fail to realise the difference between the insurance company the insurance broker or the aggregator.

The underwriter is the party who are taking the actual risk in insuring you and they are the insurance company. Many such insurers have opted over the years to allow panel brokers to sell insurance cover on their behalf in return for a sales commission which has traditionally averaged out at about ten percent of the premium charged.

The insurance company will review their relationship with the broker on a regular basis and if the account is profitable and of substance they will negotiate bespoke discounts for individual schemes that will allow the broker to offer cheaper insurance rates to the parameters of their allowed discounts.

Brokers very often create their own personal lines and brands which then get promoted via the companies own marketing facilities. This is where a lot of the confusion comes from with the general public believing the brand is actually the insurance company. The truth is on average an insurance broker of any substance will have at least twenty insurance companies on its panel, each one offering numerous schemes for different criteria of consumer. Because of this variety many personal lines brokers can deliver cheaper cover options than some competitive direct insurance providers.

Car insurance is without a doubt the biggest market place for sales and this was the basis for the introduction of the insurance aggregators model who provide price comparison services. The difference between these price comparison companies is that they do not sell insurance products, even on behalf of the insurance company, they are just online services that display dozens of market rates for dozens of companies, in effect they are a further extension and tier of the broker model.

Like Brokers who sell the product for the insurance company the aggregators charge a commission to the brokers when they provide a confirmed buyer to the broker. This model might seem like an extra burden on cost but as the marketing expense has been undertaken by the aggregator the broker is simply paying for those marketing expenses. As long as the charges remain an affordable marketing acquisition this model will continue to work for everyone including the insurance company.

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