Direct insurance marketing companies are currently feverishly competing for a share of the personal insurance market and they are sparing no cost in the way they are advertising.
It is a fact that an established insurance broker has worked hard for years and at great cost to establish his or her business by being knowledgeable, continuously updating him/herself of changes in legislation and products and by delivering high quality service at competitive rates with satisfactory claims settlement.
One of South Africa's leading insurance companies, in a recent advertisement, describes a broker as an educator, counsellor, therapist, partner, supporter, significant other, hero, right-hand man, a shoulder to cry on, wizard, aid, planner, tower of strength, mr. fixit, representative, helper, negotiator, adviser, guardian angel, handyman, conductor, knight in shining armour, custodian, friend.
The big issue in the direct companies' drive for business is to cut out the middleman in order to save on your premium. Well, I have put them to the test and have found that the purple & green direct insurance company's premium was in fact 8 % more than my current premium with my yellow insurance company. Apart from their premium being more expensive they also charge you an initial take-on fee of R150.00. I suppose this is necessary to pay for all their expensive advertising.
The selling of a policy is merely the beginning of a service cycle, the first test of which normally comes with the submission of the first claim. When dealing direct a client takes personal responsibility in transactions that normally demand good understanding of sometimes complex product features. This is often when clients wished that they were dealing through a broker, as his or her services at that time are worth far more to the client than a promise of an improbable bonus sometime in the future.
A further danger to clients who deal directly is that they are often under-insured. A person behind a computer screen, talking to a client on the phone, has no idea of the true value of goods that this client is insuring. The broker that visits his client at home is in actual fact in a position to advise his client of areas where he/she might be under-insured.