How insurance brokers work

Everything you need to know about insurance brokers

Cape Town, Western Cape, South Africa

 

What are insurance brokers?

In South Africa, short-term insurance advisers are also called insurance brokers. These insurance brokers in Cape Town represent people and businesses who are looking for insurance. You can find insurance brokers that sell insurance and use their insights into the industry to help you get a good deal in Cape Town.

 

Brokers can assist you with the claims process too, because they work for you and not for the insurance provider. South Africa’s insurance system is set up so that brokers benefit you, the insured. The broker will work hard to get you the best results and act as a representative of your needs when communicating with the insurer. The first thing an insurance broker from Cape Town does for their customer is find them insurance quotes.

 

Working with an insurance broker isn’t tedious or difficult. They will offer you guidance, advice, and assistance with your questions and with the steps, claims, and policies involved in insurance. When speaking to a broker, choose a broker with experience who understands the complexities of the insurance industry in South Africa. Through them, you can find deals, packages, and combined insurance plans you may never find on your own. Your broker will even assist you with each step in the claims process.

 

Are insurance brokers and insurance agents the same?

They may sound similar, but insurance brokers and insurance agents are very different. They each play a different role and represent a different party. Brokers represent the insured person or organisation, while insurance agents represent insurance providers. That means your broker is most interested in benefiting you, the insured, and that their advice will be unbiased.

 

Is an insurance broker cheaper than going directly to the insurance provider?

Any insurance broker who wants to charge their customers a fee should let them know before any work is done on their behalf. The customer should agree to the broker’s rates, if any. Some brokers charge their clients a fee, while others don’t. You may choose to acquire the assistance of a broker or choose to speak directly to the insurance provider. The choice depends upon personal preference.

 

How are insurance brokers paid?

An insurance broker gets paid commission by insurance companies for each insurance policy they sell. This commission is usually a percentage of the insured’s monthly premium, say 13%. The Short-Term Insurance Act, 53 of 1998 prescribes which percentages insurance providers need to pay brokers in South Africa. From as little as 12.5% to as much as a maximum of 20% of a customer’s monthly premium should go to the broker as commission for selling the insurance policy. The type of insurance sold also influences these percentages.

 

Insurance brokers in Cape Town must meet requirements set out in the Short-Term Insurance Act because it applies to all insurance workers in South Africa. Part of the requirements set out include that any fee above what the insurance company pays them must be disclosed to customers beforehand. Prices should also be reasonable, and the client should agree to these extra fees in writing.

 

How much will I need to pay for an insurance broker?

The amount depends on the broker’s fees, because some insurance brokers in Cape Town will charge their customers a fee above the commission the receive from an insurance provider. Other insurance brokers rely only on the commission from insurance providers and do not charge you an extra fee. The broker’s fee structure may sometimes be  influenced by what percentage of commission they receive from the insurance provider. Their only means of earning as insurance brokers is through commission from the insurer and fees from the client.

 

To find the best insurance policy for you, you can talk to any insurance broker in Cape Town. They can help you find solutions that suit your budget and your needs. You can also go directly to the insurance provider if you choose.

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