An insurance broker is a specialist in insurance and risk management.
Brokers act on behalf of their clients and give advice to their clients' interests. Sometimes the insurance broker will act as an agent of the insurance company, but where this is the case the situation should be fully explained to you.
A broker will help you identify your individual and/or business risks to help you decide what to insure, and how to manage those risks in other ways. An insurance broker might specialise in one specific type of insurance or industry, or they might deal with many different types. Insurance brokers can give you technical advice that can be very useful if you need to make a claim. Brokers are aware of the terms and conditions, benefits and exclusions and costs of a wide range of competing insurance policies, so they can help you find the most appropriate cover for your own circumstances. Brokers can help arrange and place the cover with the chosen insurer and can often provide advice on how to make the most of your insurance budget.
Why use a Broker?
Insurance brokers have access to many different insurance policies and, because they deal with a range of insurance companies directly, sometimes brokers have access to policies that are not available to most consumers. Because the general insurance industry in Australia offers so many options, it can be quite difficult to choose the right policy. Some insurance policies can be complicated, and an insurance broker can help you understand the details of a policy and also work out what level of cover you need, so that you can make sure you are properly protected. Depending on the type of advice a broker may provide, they may be required to provide that advice, in addition to other information, in a document called a Statement of Advice (SoA). Brokers can often find you a good deal on insurance because they have a thorough understanding of the insurance market and can negotiate premiums on your behalf. A broker will explain your policy to you and advise you if there are any special situations you need to know about. Brokers can prepare a customised insurance and risk management program for you or your business, where they design the policies, negotiate the terms with insurance companies and place the cover with the insurer. By including a risk management program, which puts some of the responsibility for risk prevention and loss minimisation on you or your business, you can reduce premium costs. If you need to make a claim on your policy, your broker will assist you through the process and will liaise with the insurer on your behalf.
Choosing a broker
Choosing a broker
Just as you would spend some time trying to make sure that the insurance policy you choose is the right one for you, if you decide to use an insurance broker you should make sure that the person you appoint is going to help you in your particular situation.
NIBA has a Need-a-Broker service to help you find a registered, qualified insurance broker in your area who is a NIBA member.
To find a broker visit www.needabroker.com.au or call the Need-a-Broker service on 1300 53 10 73
Regulation
All insurance brokerages in Australia must have an Australian Financial Services (AFS) licence, or be appointed as an authorised representative of an AFS licensee. Brokers must also meet the conduct standards set out in the Corporations Act 2001 (Cth) (Corporations Act). There are general conduct obligations that apply to all financial services licensees and authorised representatives and specific conduct obligations that apply to an adviser who provides personal financial product advice. Where a broker provides you with personal financial advice then in accordance with the Corporations Act they must:
Provide you with appropriate advice
Warn you if their advice is based on incomplete or inaccurate information
Prioritise your interests where there is a conflict with their own interests (or an interests of a related party). Prepare and provide you with a Statement of Advice (SoA) that documents their advice in relation to the insurance policy
The Australian Securities and Investments Commission (ASIC) is the industry regulator that monitors the conduct of those who hold an AFS licence.
Brokers are required to be members of an authorised external dispute resolution scheme as a condition of their AFS licence. Generally, the Financial Ombudsman Service (FOS) is the independent organisation that helps resolve complaints and problems between brokers and their clients. Brokers are bound by the decisions of FOS.
Experienced insurance brokers in Australia will generally hold additional qualifications such as a Diploma of Insurance Broking, or other tertiary qualification, or a professional designation, such as NIBA’s Qualified Practising Insurance Broker (QPIB) or Fellow. Members of NIBA also promise to follow the terms of the Insurance Brokers Code of Practice which sets out the standards of professional practice and levels of service that are expected of brokers.
Resolving Disputes
If you do have a complaint about the services being provided by your insurance broker, in the first instance you should raise it with them. All insurance brokers should have an internal complaints and disputes handling process designed to help resolve any complaint.
If it is not possible to resolve the complaint to your satisfaction through this process, you can refer the unresolved complaint (called a dispute) to the free and independent external dispute resolution process administered by the Financial Ombudsman Service (FOS).
FOS will examine your dispute and if it is within its jurisdiction, seek to resolve it by liaising with you and the insurance broker. If the dispute cannot be resolved, FOS can make a determination imposing binding sanctions on an insurance broker after considering the available evidence. While the above process is designed to make things easier for you, you still have your normal legal rights regarding any dispute.
Reassuringly, there are very few disputes involving insurance brokers each year. In the 2012-13 financial year, disputes against brokers made up only 2.5 per cent of the total number of general insurance disputes made to FOS*.
If you have a complaint about the products or services being provided by your insurance company, please refer to the section resolving disputes.
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