Which insurer do you work for?
We are insurance brokers; we work for you as your agent, not the insurer. We are not employees or sales reps for any the insurance companies shown in our quote.
I already have a quote from one of the insurers you have quoted with; why is your quote so different to what I received direct?
We are members of a group called IBNA. This is the largest network of Independent Insurance Brokers in Australia with over 90 members placing over $1.3 Billion in premiums annually.
What this means for you is that we are able to source insurance policies that you cannot get directly with some insurers. Through the combined buying power of all IBNA members, we can access policies which may have better cover and in many cases, cheaper cover, than if you went direct to that insurer.
There is also a chance that the cover we have quoted may be different to what they have quoted. If you want to, you can send it to us and we can show you where the differences are.
So what does it cost me for your services? Is it more expensive to use a broker?
The total premium quoted in our quote will always include any broker fee or commissions; there is no extra cost to use a broker. In fact, in many cases, we can obtain better policies at cheaper rates on some policies due to our membership with IBNA when compared to the standard direct policies if similar cover was taken.
But aren’t brokers paid commission from the insurer, and if so, why is there a broker fee?
It is important to view the commission as part of the distribution costs the insurer will face. If the policy is purchased through the insurers office directly, they have to pay wages, rent, and general overheads to have that office. When purchasing through an Agent of the Insurer, similar commission structures apply which are paid to the Agent. Buying direct from an insurer or their agent is not necessarily going to mean a cheaper price as their direct premiums will often include a similar margin for their own costs when compared to commissions offered to brokers.
Commissions however do vary. They are not a fixed amount or percentage. They can range from 0% (sometimes called net rated policies) and up to 30% of the base premium. Different products from the same insurer will have different commission percentages and the percentage amount will often vary between insurers.
Finally, most brokers also have a break even margin that they take into account when setting their price, that is, a minimum amount they need to charge you for their time for it to be profitable to them and so for smaller policies, a broker fee may be used to reach that margin so that even smaller premium policyholders can get professional advice.
Here is an example of how a typical broker would handle premiums, commissions and fees:
Base Premium is $1,000 plus GST and Stamp Duty
Commission is 20%
$1,000 x 20% = $200.00 + GST Commission
GST (10%) and Stamp Duty (9%) = $199.00
Brokers Margin is $250.00
Fee Charged is $50.00 + GST
Total Income earned is $250.00
Total paid by customer is $1,254.00 of which $204 is tax.
Base premium is $850 plus GST and Stamp Duty
Commission is 15%
$850 x 15% = $127.50 + GST Commission
GST (10%) and Stamp Duty (9%) = $169.15
Brokers Margin is $250.00
Fee charged is $122.50 + GST
Total Income earned is $250.00
Total paid by customer is $1,153.90 of which $181.40 is tax.
The example above does not take into account the cover provided by the policy, it is a simple chart to show how most brokers would apply a broker fee to either balance out the income or to reach their minimum fee cost structure.
After balancing their income or ensuring the fee charged meets their minimum cost structure; a broker would then recommend which policy has the better cover, or a better excess structure simply because in the above example, it doesn’t matter which policy you as the customer were to choose, the income they receive is the same. It is a common misconception and a myth that brokers only recommend the policy with the highest commission.
In some cases, a broker may not charge a fee as a gesture of goodwill to help out a home owner or small business owner or for someone else with a small premium policy. A broker may also choose to refuse the commission (net rate a policy) and charge a fee instead if they feel the commission offered is too high for that type of policy. That of course is up to the discretion of the broker and precisely why it is important to build a relationship and trust with your broker or to ask them how they calculated their fee.
I already have quotes from an online insurer, my bank, or over the phone from the insurer; but now I’m confused about which one is better?
That will mostly come down to what you’re looking for in a policy. It can be confusing and that’s why we are here to help you.
Because we work for you, and not the insurer, if you would like us to add the quote you obtained online or from somewhere else into our comparison chart for you, we will gladly do that to help you make an informed decision, even if that means you end up taking the other quote.
We would much rather you purchased a policy knowing what you are insured for over trying to ‘sell’ you something specific. There is no cost to you for this additional service we offer, we only receive payment if you proceed with one of our quotes.
Do I have to pay right away?
No. We have 14-day credit terms in which we can arrange cover for you, giving you some time to pay the premium outright.
Otherwise we do have monthly payment options and quarterly payment options available for you. With some insurers this is at no extra cost, for others that don’t offer a direct debit facility, a monthly payment plan can be arranged through premium funding. Premium Funding gives you the flexibility to choose any policy offered and have a monthly payment option, even if that insurer doesn’t offer a direct debit facility. If you’d like a monthly or quarterly payment option for your quote, let us know and we can let you know what your options are.
What happens after the policy is set up?
We continue to act as your representative. You can call us whenever you need to make changes to your policy, to add more cover or take away cover, to make a claim and for your renewal. On renewal, we once again compare the market for you and give you advice on which option we recommend and why; whether that is to stay with the current insurer, or whether we think you should change insurers and why.
Financial Services Guide (FSG)
If you'd like to know more, please read our financial services guide (click here) or call our office.