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How to save money with an insurance broker

Gauteng, South Africa

If you’re reading this, you’re here to save money. The big question is, can an insurance broker save you money? And if they can, how would that work? Here’s everything you need to know about how insurance brokers in Gauteng make money, the work they do, and whether they can benefit you.

The insurance broker’s work

Insurance brokers in South Africa work for the insured person and not for the insurance company. They are sometimes called insurance advisers, because a large part of their role is offering their customers insight into the complex insurance world. There are insurance brokers in every province of South Africa. In Gauteng, insurance brokers can display a high level of expertise.

The work of an insurance broker is to offer a company, business, organisation, or individual advice and assistance in the insurance world. It begins with getting you various insurance quotes and helping you to choose or find the best insurance to suit your needs. The insurance broker should offer you unbiased views on what each insurance provider offers and should give you options from multiple providers.

In the next step, the broker should represent your needs to the insurance provider by helping you with paperwork, questions, and even with claims. This is why the impartiality of an insurance broker is important for the individual or company working with them. A broker should also have experience with the specific kind of insurance you are looking for, for example medical aid or third-party car insurance.

Does the work of an insurance broker help you to save money? That depends on the broker, their fee structure, and a few other factors. Here’s what you need to consider when deciding whether or not to work with an insurance broker.

Can an insurance broker save you money?

It depends, as a few factors come into play. The first question to ask is whether your broker charges their own fees. Brokers make money by getting commission from insurance providers and sometimes they also have their own fees. A broker who charges their own fees may be more unbiased, but they may also cost you more. While you could save money on your insurance premiums, but you may end up paying more in broker fees.

If a broker helps you find a deal you could never find on your own, they may save you thousands and thousands of Rands in the long run. This is only likely when the insurance broker is unbiased, so the next question to ask would be whether they have any reason to sell you a certain insurance provider or plan even if it isn’t the best one for you.

Insurance broker commission and fee structures

When considering the reliability of an insurance broker, consider how insurance brokers make money in South Africa. It is primarily through commission. Each broker gets a percentage of your monthly premium as a commission from the insurance provider. According to our country’s laws, there are prescribed percentages the broker should get. This means that a broker may be tempted to sell you plans with higher premiums so that they make more out of the deal.

This same law, the Short-Term Insurance Act of South Africa, sets out requirements that all insurance brokers in Gauteng must meet. Requirements like informing their clients about fees upfront and having clients agree in writing to the fees.

Insurance broker or insurance agent?

An insurance agent works for insurance companies and doesn’t do the same work an insurance broker does. The insurance broker works for you and represents your needs, but the insurance agent represents the needs of the insurance provider.

Should I go directly to the insurance provider?

You can save money by speaking directly to the insurance provider. If you take initiative and research what the different plans offer and what they exclude, you could even find a good insurance deal. You will not need to worry about the bias of your agent or any extra fees. The biggest risk would be the unknown, i.e. anything the insurance broker might know about that could benefit you.

How much do insurance brokers cost in Gauteng?

Each broker will have different fees. Their commission can be between 12.5% and 20% of your monthly premium, and then any added fees over and above that may exist. Each broker decides their own fee structure, and some don’t have any extra fees at all. You could pay nothing, or you could end up paying a lot. You could also end up paying more for insurance if your broker isn’t reliable. Before you choose an insurance broker, research their reputation and ask questions to determine whether they are reliable.

The easiest way to save money is to avoid the insurance broker altogether. If you need insurance in Gauteng, you can simply search quotes and compare plans online. Insurance companies in South Africa have made it very easy to get the insurance you need at the price that suits you.

The information quoted is correct at the time of publishing this article. The information in this article is provided for informational purposes only and should not be construed as financial, legal, or medical advice.