Summary: A direct insurer sells its own policy, while an insurance broker acts for your business and can compare cover from multiple insurers. Commission is built into the premium either way, any separate broker fee must be disclosed up front, and a broker can help manage your claim and advocate for you if a dispute arises.
The Benefits of Using an Insurance Broker
A direct insurer sells you its own policy, while an insurance broker acts on your behalf and compares cover from multiple insurers to find an option suited to your needs.
Choosing between an insurance broker and going direct can have a big impact on the cover your business gets. For businesses with employees, contracts, premises or professional advice, using an insurance broker can provide greater choice, tailored cover and support when you need to make a claim.
While a sole trader with a simple, low-value risk may be comfortable buying insurance directly, the cheapest online quote is not always the safest choice.
Want to see why businesses across different industries choose to work with an insurance broker? Explore who we help to see how Barrack Broking supports businesses like yours.
You can speak with our insurance experts about your industry specific insurance needs today.
The Difference Between an Insurance Broker and a Direct Insurer
An insurer is the company that takes on the risk and pays your claim when an insured event occurs. An insurance broker is a licensed intermediary who acts on behalf of the business, rather than the insurer, to arrange insurance cover.
| Direct Insurer | Insurance Broker | |
| Who they act for | The Insurer | Your Business |
| Choice of insurers | One insurer | Can compare and arrange cover from multiple insurers |
| Advice given | Its own products and available cover | Assess your insurance needs and can recommend suitable options |
| Policy wording | Provides its own policy | Compares multiple differing policy terms, exclusions, limits and conditions |
| Claims support | Deal directly with the insurer | Brokers assist with the claims process and liaise with the insurer on your behalf |
| How they are paid | You pay the insurer’s premium | Brokers may earn a commission for arranging your cover |
The key difference is who is acting for whom.
A direct insurer is always selling its own insurance product. However, a broker is working from the business’s side of the relationship and can compare available options
Why Do People Use Insurance Brokers?
People and businesses use insurance brokers because they want expert advice, more choice and support throughout the life of their policy.
Insurance brokers aren’t just for big businesses, and using one doesn’t necessarily cost you more. Brokers help you compare multiple insurers, tailor cover to your risks, and advocate for you when it comes time to submit a claim.
There are three main ways the cost of insurance and broker services may be structured.
| Cost | How it works |
| Premium | The price you pay for your insurance cover. |
| Commission | Often paid by the insurer to the broker from the premium. |
| Broker fee (Occasionally) | Additional fees may apply and will be disclosed in writing before you buy. |
Frequently Asked Questions
Do I pay more for business insurance if I use a broker?
It is a common misconception that using an insurance broker means paying more for your cover. Commission is built into the premium whether you go direct or via a broker, and any separate broker fee must be disclosed up front under the National Insurance Brokers Association (NIBA).
Is direct insurance faster than using a broker for a small business?
Getting a quote directly online can be faster, but that doesn’t necessarily mean the overall process will be. If you need to make a claim, a broker can handle the paperwork, negotiate with the insurer and help resolve disputes, potentially making the claims process quicker and easier.
Can an insurance broker help me if my claim has already been rejected?
Yes. A broker can review the insurer’s decision, help you understand why the claim was rejected and advocate for you in discussions with the insurer. If the dispute cannot be resolved through the insurer’s internal complaints process, they may also help you escalate the matter to AFCA.
What is the main difference between a broker and an insurance agent?
An agent represents the insurer and sells that company’s products. A broker represents you, shops multiple insurers, and provides advice on record about suitable cover.
Buying insurance direct vs through a broker in Australia: what’s the difference?
Buying direct means dealing with one insurer and comparing the price and cover they offer. A broker can compare options from multiple insurers, provide advice based on your needs, and support you through the claims process and any disputes that arise.
Better Insurance Starts with Barrack Broking
We understand the difference it makes to have someone advocating for you when you need it most.
Whether you’re reviewing your business insurance or looking for personal cover, our brokers can help you find the right protection for your needs. Don’t wait until you make a claim to discover you’re underinsured. Talk to one of our insurance brokers today.