If you have been with a particular insurer for some time, you may benefit from switching to a different insurance broker and company. However, there are pros and cons to switching, and lower premiums aren’t the only factor to consider.
If you secured a good deal on your insurance policy some years ago, it may be the case that you haven’t questioned it since. The payments go out of your account automatically every month, meaning that you don’t have to worry about it again. Although the knowledge that you are covered brings peace of mind, staying with the same insurance broker and even specific policy over the long term may not be the best or most cost-effective solution. Conversely, if you are thinking of switching to gain lower premiums or other benefits, it is worth taking a broader view of the process, since there are other factors to think about.
Needless to say, there may be circumstances in which you have to change insurance broker. If your business is much larger or looks very different than it did several years ago, or if you now have specific risks that you did not previously, you should certainly consider changing your policy to reflect these facts. Depending on how different your business is, you may need a different insurance broker to do this.
Pros and cons of staying with your current insurance broker
Staying with the same insurance broker has many of the advantages of maintaining any long-term business relationship. Knowing who you are dealing with has enormous benefits, not least because you know that this person has a good understanding of your company and requirements. Changing broker means starting again from scratch, for both parties.
The long-term relationship works in both of your favour, since the insurance broker values your future business, which should be reflected in the way they treat you. This factor should typically make customer service faster and easier, since the broker ought to prioritise you as a repeat client. They may even offer you preferential rates to reward you for your business over the years and to incentivise you to stay.
Having said this, there may be downsides to the long-term relationship, particularly if it is not rewarded in such ways. In the worst case, your business is taken for granted and prices may even be higher, since you are considered a certain prospect for the future. In other cases, good service may not be enough to mitigate the less competitive rates.
Pros and cons of switching
Just as there are advantages and disadvantages to keeping the same insurance broker for many years, there are pros and cons to switching. One of the most obvious advantages may be that you can get a better deal elsewhere; what seemed like a competitive policy years earlier might now be relatively expensive if the market has moved on. If your needs have changed in the meantime, there may be other benefits to be gained by switching insurance brokers; you may, for example, be able to bundle together several different policies (which you might not previously have needed) into a combined policy, accessing economies of scale in the process.
Whilst it may be useful to switch insurance brokers occasionally, you should think carefully before making a habit of it. A new insurer will track your insurance history and will know who you have used in the past, and for how long. Insurance companies are generally sceptical of clients who switch on a regular basis, since they know that they will probably not stay with them for long. They may deny you a policy on these grounds.
Conclusion
The decision to change insurance brokers is one that should not be taken lightly or on the spur of the moment. Although you may be able to make financial savings in the short term, you should always keep an eye on the long-term picture, including how the relationship with your current broker might evolve over time, and how it might affect your future chances of accessing competitively-priced policies.
This article was supplied by the leading firm of Irish insurance brokers, Robertson Low, established in 1995 and the only Irish incorporated ‘Lloyd’s broker’.
