Why use a broker?

Insurance brokers see themselves as a "one-stop-shop" for everything to do with insurance. And some companies - wholesale insurers Vero, Lumley and NZI spring to mind - offer the majority of their policies through brokers and not directly to consumers.

Gary Young from the Insurance Brokers Association of New Zealand (IBANZ) says good brokers add value by making sure the risks a client wants covered are presented clearly so that the best possible premium is obtained. He also argues that brokers have an important role as advocates for their clients when they make a claim.

What it’s really like

Our members had good and bad things to say about insurance brokers.

Positive experiences

Gordon, a member from the Bay of Islands, tells us he’s used the same broker for his farm-based business for the last 23 years. His experience is one of hassle-free claims (including three written-off cars), rapid restoration of bonuses following these, helpful advice each year when renewing policies, and a professional service. The broker finds the most cost-effective company for Gordon each year when he renews his policies. Having seen some of the problems his friends have had when dealing directly with insurance companies, Gordon recommends using a good broker.

Nadine and her partner have used an insurance broker for four years and believe they have received service that is second to none. Nadine says they receive comprehensive advice and full disclosure. Before buying any policy they always do their own research. They always give their broker the opportunity to come up with something better - and he always does.

Janet has used the same broker for over 20 years for personal and business insurance (but not health and life). "During that time they have swapped us around various insurance companies to get the best deal. We have made several claims which have been handled through the broker and the outcome has been satisfactory and the process painless. One claim involved a boat and the broker argued on our behalf and the claim was successful."

Not so good

Not everyone has had a good experience.

Sandie says brokers tend to have favourite insurance companies and far from getting the best deal, stick with one company or at most two. "I have found that by phoning round myself, I have managed a much better deal than a broker could do for us. Every three years or so I do the rounds and get quotes from other companies but so far this has resulted in us sticking with AMI."

Julie, a subscriber from Christchurch, told us that when a window was wind-damaged one weekend her insurance broker would not return calls. She phoned the insurance company listed on her policy but they had no record of her and said her broker would have to sort it out. Her only options were to pay for the repairs or leave a gaping hole. She paid for the repairs and never heard from her broker. She found out policies from the bigger companies were cheaper and they offered a 24-hour claims service.

Sophia wanted to halve her life insurance cover so that she could reduce the $185 monthly premium. While her broker had been efficient in signing up the original policy, trying to get her to reduce Sophia’s cover was a nightmare. “She tried to convince me not to change. But I didn’t agree. Then she tried to delay the process. It wasn’t sorted out a month after I first contacted her … I then contacted Sovereign trying to sort it out myself. Sovereign told me I had to do this through the broker.”

Only when Sophia wrote to Sovereign directly did her broker get in touch. Sophia ended up cancelling the policy.