Direct Insurers Vs Traditional Insurance Brokers

There are two types of insurance brokers, direct and traditional. We’ll take a look at the two to help you make a comparison that will help you determine which one will be best for you.

Direct Insurers

Direct insurers are auto insurance companies that have found that they can save money by cutting out the ‘middle man’. By dealing directly with the customer, rather than paying a broker or broker, they can reduce costs and therefore offer lower premiums.

Because these companies do not have brokers who access the public through them and attract new clients, they use marketing tools to attract the client. By advertising your services through billboards, television, radio, print media and the like, you arouse the interest of the public. The Direct Insurer will then have a call center where a potential client can call and consult their services.

The caller will give all their details to the company directly, and there will usually be less paperwork than with an insurance broker. The common myth is that no commissions are paid at all within these Direct Insurer companies, but this is not true. The commission is paid to the call center agent upon registration, but that is something unique. With traditional insurance brokers, the commission will be paid to your broker on an ongoing basis based on your monthly premiums.

Insurers based on traditional brokers

These auto insurance brokerages have been around for a long time, unlike the relatively new idea of ​​Direct Insurers. Traditional insurance brokers have developed a very clear separation between customer service and risk management. The theory for this is that if you have separate specialized entities, each broker can develop closer relationships with their clients and offer them better service. Then the risks will be better understood.

So which one is better?

It’s hard to debate which type of insurer will save you the most money. At first glance, it may seem that direct insurers will be cheaper, especially when it is considered that they have eliminated the fees of the intermediary and therefore the broker. It is wise to keep in mind that these companies also have much larger advertising budgets than traditional insurance brokers. Sometimes the money they have saved on broker commissions has been used for advertising, in order to attract their clients. This will make your premiums more expensive. However, this is often the exception to the rule, and only by researching and comparing will you be able to find the direct insurer that is best for you.

Traditional insurers can sometimes offer you a better deal than direct insurers. This is especially so if you include the contents of your home on your insurance application. You will receive a discount when you decide to insure more than your vehicle with one of these companies. Unfortunately, if you don’t need to insure the contents of your home when purchasing auto insurance, a traditional insurer may be a more expensive option.

In general terms, in some cases it is more economical for the client to use a Traditional Insurer rather than a Direct Insurer, and vice versa. It is primarily based on your specific needs and insurance requirements.