With banks and direct insurers selling business insurance, is the role of the broker under threat? Ann Hesketh asks four small businesses if a broker is still important to them.
Brian Kelsey & Company
Brian Kelsey is managing director of Brian Kelsey and Company, a small accountancy firm with offices in London and Faversham.
He says that expert advice is key. “I would not consider going directly to an insurer because I strongly believe that you need to go to an expert for sound advice,” he explains.
“A good broker will know the market. By searching the internet, you may get the cheapest quote, but you will have a limited idea of the cover’s small print, and only when you need to make a claim will you really know how good it is.”
He has always bought his business insurance through brokers. Currently, he is a client of Stenning Insurance Services, based in Folkestone, but is considering changing to Towergate, which has a branch in Whitstable.
His current insurer, Ecclesiastical, has withdrawn its ‘business from home’ policy and Kelsey is now looking for an alternative.
“Towergate seems to be on the ball and talked me through everything, including insurance for our London office and cover for the laptops I provide to two of my contractors.”
Kelsey says that the track record of the insurer as well as the broker’s opinion are crucial when he is making a decision about insurance. “I don’t go for the smallest premium. The insurer has to have a good record in paying and considering claims.
“Brokers that are not tied to any particular company can survey the market looking for the best quote, but they can also weigh up the merits of each quote, including the insurer’s claims record.”
He says that insurers and brokers could be more proactive in getting information to their clients. “In my case, instead of waiting until the renewal date to tell me that the policy I had was no longer an option, I would like to have known that beforehand. I would like to have had two or three months to make an alternative arrangement.”
Despite that, Kelsey says his overall experience of the industry has been “pretty good so far”. “I made a couple of claims on my personal insurance and had no trouble at all.”
Insurance is a high priority for John Stubbins, managing director of JGS Couriers, a rapid response courier service specialising in same-day UK and European deliveries.
Based in the West Midlands, his company has eight vans and seven employees.
Stubbins buys his business insurance through FM Green, now part of the Bollington Group. “It specialises in courier insurance and can sort out everything I need – it’s like a one-stop-shop for all my insurance needs,” says Stubbins.
He adds: “I’m very happy with its service so far. I had an issue with one of my employees who is suing me for an accident which happened 18 months ago, when he worked for my company. The case is now with solicitors and I don’t need to worry about it.
“Also, if I have a problem with one of my vans, I need it to be sorted out quickly so that I can get it back on the road. Last time I needed one of my vans repaired after a road accident it took only three days. I just took it to the garage and got it sorted. I didn’t have to wait for the insurer to give the
go-ahead or anything like that. My broker deals with that side of things.”
Stubbins says that running his courier business is a demanding job and he doesn’t have time to waste trying to sort out insurance problems. “That’s why I’m really happy with my broker. Its service is really efficient. For example, I needed to update my cover note, and within five minutes of calling it was sitting in my fax machine.”
However, he points out that the industry could do better by simplifying not only the processes, but also the paperwork. “They need to get rid of the jargon. I don’t know any insurance policy which is easily understood. They say the devil is in the detail. You often find important things in the small print. But who actually reads the small print?”
He says that, although price is important, he wouldn’t choose his business insurance just based on premium.
“Our exposure is seven times higher as we do 70,000 miles a year, when the average person travels around only 10,000 miles. Also we can be on the road at any time of the day or night, so what the broker does is to secure good terms and conditions.
“I need to know that my vans, goods-in-transit and the people who work for me are fully covered. To do that separately, I would have to buy six or seven different policies and I have neither the time nor the inclination to do that. With my broker, I get everything covered under one policy. Apart from that, he tells me everything I need to know about the cover.”
Stubbins says that insurance is a necessary evil adding that “the industry does not seem to be very transparent”.
“If I have an accident, my premiums go up, so I’m paying for it one way or another. Also, everyone who has insurance has to pay for those who don’t, which is not fair.”
Chris Holt, business partner at Gatehouse Brides, a bridalwear shop in Worcester, says that small business owners do need advice on their insurance so that they can make sure all their needs are covered.
“We bought our insurance, which includes public liability, glass and goods-in-transit, from Everard Insurance Brokers, which is a London-based firm. It was half the price we were quoted by the previous broker,” she says.
She likes working with brokers because it saves a lot of time and messing about.
“We need advice,” Holt explains. “We need to be clear about our insurance. I don’t want any hidden clauses, and it is easier to negotiate when you have a broker.”
She also says that with a broker, there is no delay. “It’s much quicker and you know where you stand straightaway. I don’t want to have to wait weeks to sign a piece of paper. I just want to get it done and move on.”
Holt says she would be happy buying insurance direct from insurers or banks, as long as the premium was right and the terms and conditions were good.
Woodboro Rest Home
Emmanuel Collinson, owner of Woodboro Residential Home in Essex, says he switched his insurance provider after receiving a phone call from his broker offering him a better deal.
“I switched over immediately,” he says. “New India, my current provider, is much better than my previous one, which does not give its customers good value for money.”
He buys his business insurance through a broker, Christie Insurance. However, he points out that “price is not everything”. He says: “I want to make sure my insurance covers all the business needs. Some brokers don’t provide professional indemnity and public liability in their packages, which is really important when you work in the care home sector, especially when you care for elderly people.”
He adds: “I don’t trust insurers. I had to make a claim once. It took too long to settle. The insurer came back to me asking for a reduction in the settlement figure, which I didn’t think was fair. It did pay in the end, but that’s not the point.”
Collinson believes insurers and brokers must make the process simpler for customers, especially when it comes to making a claim. “There is always a lot of paperwork to fill in. When you make a claim, you just want to get on with your business and get things sorted out as soon as possible. There simply isn’t time for going backwards and forwards with the paperwork.”
He says that brokers can negotiate on behalf of their clients. However he points out: “They also have to think about their commission, so it can be more expensive.”
Collinson says he is not aware that businesses can buy their insurance direct from insurers or banks. “You can’t buy business insurance without a broker. But if I could do that perhaps I could save some money.
“The only insurance I have ever bought direct from a bank is personal insurance, and there is no room for negotiation. You either accept their price or go elsewhere.”