Comment: A survey from the Irish Brokers Association (IBA) this week highlighted a dramatic fall in insurance premiums for consumers across the State. Our survey reveals that home insurance premiums have fallen by 42 per cent since 2003, while motor insurance premiums are down by between 20 per cent and 45 per cent since 2001.
A number of factors are behind this welcome news. But one that generally receives much less attention than it deserves is the contribution of insurance brokers across the country who are constantly working to find the best insurance solutions for clients.
It's a contribution that is often overlooked at all levels. For example, the most recent survey of home insurance premiums undertaken by, of all people, the financial regulator, declined to include quotes from IBA members.
When the figures were published, we revealed that our members could beat the financial regulator in four out of the six policy profiles outlined in its survey, while matching the best quote achieved in the remaining two profiles. The difference was as much as €66 in some policy areas.
For a long time, the IBA felt like a voice in the wilderness when it highlighted the importance of a skilled and professional broker network for both industry and consumers, faced as we were with myths and stereotypes that had built up over many years about how brokers conducted their business. Whatever about the myths, the reality is that insurance brokers save customers time, money and worry and are a key element of the insurance industry.
For a start, customers of insurance brokers have the security of knowing that their advisers are closely regulated by the financial regulator, and this means that brokers are subject to regular, rigorous reviews of their operating processes, procedures and advice - a regulatory process that is far more stringent than for virtually any other profession. Brokers accept this level of regulation because it means that consumer confidence in the sector should be extremely high.
Brokers work actively on behalf of the consumer. They assess a client's requirements and then search the market for the best possible product. There is no question of a broker pulling a "one-size-fits-all" product off the shelf and presenting it as a solution to the client's needs.
Brokers understand the market, they offer advice and guidance and they provide choice. They also advise and negotiate on claims if a client is unfortunate enough to have had an accident or when things go wrong.
One of the criticisms of insurance brokers in the past was that they acted hand in glove with the insurance industry. But as regulated advisers, brokers must consider every product on the market whether or not they hold an agency agreement with a particular producer. IBA brokers offer specialist advice on quantity, quality and coverage of the ever-expanding variety of products on the market and their sole objective is to arrange the best product at the most attractive price for their client
In the life and pensions sector of the market, brokers must carry out a detailed fact-find on a client to ensure that they understand the client's needs and will then present a number of options with a recommendation of what the broker believes is the best product for the client's financial future.
All products on the market - including those from providers who do not operate through the broker network - have to be considered by an authorised adviser before he/she makes a recommendation and that recommendation must be presented in writing to a client, detailing exactly why that product fits the client's specific needs.
This means that if there is ever any dispute between the client and the broker, the facts are recorded.
Brokers and insurance providers might be two parts of the same industry, but they have two completely different objectives. Insurers - most of which are arms of public companies - ultimately aim to generate profits for their shareholders. Brokers, in contrast, are independent firms whose ultimate aim is obtaining the best product at the best price for their clients.
A strong broker network means that consumers can access the best value products far more easily than if they try and trawl the market themselves. No matter what surveys might be carried out on insurance rates, it is still a mammoth task for a consumer to try and find the best deal when it comes to renewing their cover, and this is where their broker can do the job for them. And in rural areas not served directly by insurers, IBA brokers play a crucial role in bringing insurance products to communities that otherwise might have to do without.
But as well as providing a key service to the public, IBA brokers also save the insurers time and money by dealing with public enquiries as well as handling the myriad of documentation relating to proposals and claims. Without this support from brokers, insurers' costs would be considerably higher and as a result the cost of insurance to consumers would increase.
Insurance broking is a highly competitive business and any broker who does not provide a first-class service or who sells unsuitable products will not stay in business very long. In this regard the market rules and this will ensure that insurance brokers will continue to play a pivotal role in the delivery of life assurance, pensions, investments, mortgages and general insurance to the Irish consumer.
Donagh McSharry is president of the Irish Brokers Association
