Consumer's 'Broker Survey' Lightweight
Chief executive of the Corporation of Insurance Brokers of New Zealand (CIBNZ), Malcolm Congdon, says the most recent survey by the Consumer Magazine of general insurance brokers is superficial and misleading to the public.
Malcolm Congdon says the survey on general insurance brokers consisted of a very basic question to a selection of brokers, asking for quotes on house and contents cover for a 1948 house with $60,000 worth of contents.
"On the basis of this very basic scenario, the Consumer Magazine has come to the sweeping conclusion that brokers add little value and consumers would be better off going directly to the insurer for their cover."
Malcolm Congdon says in a simple world that would be fine. "If your insurance requirements are very simple then dealing directly with an insurer may suffice, but as your assets grow, insurance tends to get more complicated than the Consumer Magazine would have people believe. In their recommendation they make no distinction between the basic type of cover they looked at and the complex commercial and corporate insurance programs brokers arrange."
Malcolm Congdon says price is not the only factor to consider when buying insurance, even for basic domestic covers. "For example;
· insurance companies have different policies for tenanted properties versus owner occupied ones; · people running a business out of their garage will not be covered if their house burns down and they only had a basic home and contents policy;
"On a domestic level insurance can be straightforward, but it is a fast changing market place with a large number of things to consider. Brokers act for the consumer, not the insurer, so they can independently assess price, policy coverage, advise on deductibles, earthquake top-up, check security ratings of insurers, and very importantly facilitate in the event of a difficult claim."
"The Consumer Magazine article ignores the complexity of insurance. They asked a basic question and they got a basic response from brokers. Next time they should throw a bit of complexity into the scenario and then see what sort of response they get."
The Corporation of Insurance Brokers of New Zealand (CIBNZ) represents the major general insurance broking and risk management firms in New Zealand. Members manage the placement of over 70% of commercial insurance premium in New Zealand, which is in excess of $1 billion of premiums per annum and employ over 1,100 people. The Consumer Magazine survey did not determine if any of the brokers surveyed for the article were members of the CIBNZ.