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How to select a broker:
You will benefit most by developing a
close business relationship where the broker
understands your future plans, the associated risks
and how you like to do business.
1. Before selecting a broker there are
some basic questions you need answered by the broker
especially when looking for business insurance. For
example:
Do you need business or domestic cover?
Are you looking for special services? For
example, special risk management services or
technical advice?
Would you prefer to work with a small or large
firm?
2. Ask the brokers you've selected to
give you an expression of interest or a proposal.
From the expression of interest you'll get a feel
for which one may be right for you. This should
detail:
Their qualifications and registration with
official bodies or associations (are they a QPIB
or NIBA Member firm?)
Who would service the account
Their experience with your type of business
Their range of services
Size of their "typical" client
How they bill for work
Referees.
3. If you are a business, you might then
ask the broker to make a presentation. At the
presentation you should look for:
Business compatibility
Level of commitment
How they propose to solve your insurance
problems
The competitive advantages of their firm over
any others you may have selected.
4. Once you've made a decision, include
a review period in the relationship with your
broker. This allows both parties to discuss issues
of concern and see if the relationship is working.
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Is your broker qualified?
It's always good to know that someone
who provides a vital service to you is qualified.
Below is some important information which will allow
you to question a broker about their qualifications
to look after your insurance needs. Not all brokers
are from NIBA member firms, and therefore aren’t
subject to NIBA’s strict
codes of conduct. It pays to ask.
All brokers are required to be licensed
by the
Australian Securities and Investments Commission
(ASIC). Their conduct is regulated by ASIC and they
must comply with the requirements of their
Australian Financial Services licence.
All brokers are required to meet minimum
ASIC standards of education. However, NIBA Qualified
Practising Insurance Brokers and Fellows meet even
higher educational standards than those required by
legislation.
All brokers are required to participate
in a Government-approved consumer
complaints-handling scheme. Insurance Brokers
Disputes Limited resolves disputes and complaints
related to brokers. NIBA brokers must also comply
with the Insurance Brokers Code of Practice, which
sets standards of customer care that must be
complied with. A new revised Code comes into effect
on January 1 2007.
The Code requires clear and prompt
communication with the client, proper representation
when arranging policies and providing support in the
event of a claim.
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Why do you need a NIBA broker?
NIBA member firms are subject to strict
screening before being admitted as members. They
also agree to enforceable codes of conduct and
practice, and subscribe to an external complaints
facility.
NIBA member firms employ Qualified
Practising Insurance Brokers (QPIBs) who undertake
continuing professional education. This ensures they
are up to date with industry trends and changes so
they can provide you, the insurance buyer, with
quality advice.
An NIBA broker can save you time, money
and worry. Like an accountant or lawyer who provides
you with impartial professional advice based on
years of training and experience, a qualified broker
can do the same with your insurance.
When arranging insurance, many people
take shortcuts without seeking proper advice,
understanding the fine print or considering whether
they are getting value for money. Often they end up
with cover they don’t need and – even worse –
without the cover they really do need.
Whether it's business, life, home or
motor insurance, NIBA brokers provide advice and
assistance to make sure you are properly protected.
NIBA Brokers have access to lots of
different policies because they deal with a wide
range of insurance companies and sometimes other
types of underwriters as well. A broker will be
aware of the benefits, exclusions and costs of
competing policies on the market. They will also
help arrange and place the cover and can often
provide advice on how to make the most of your
insurance budget.
Using a broker doesn't necessarily cost
more. Often it costs less because brokers have
knowledge of the insurance market and the ability to
negotiate competitive premiums on your behalf. A
broker will also explain your policy and any special
situations you need to watch out for. Furthermore, a
broker is obliged to advise you of fees charged for
services provided to you.
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Types Of Insurance
Most small businesses close their doors,
never to re-open, following a major disaster such as
a fire, or an extended court case or period of
business interruption. This is usually due to
inadequate insurance.
A strategic insurance program, based on
advice from a good insurance broker, can prevent
that from happening. Informed decisions need to be
made about what to insure and which risks to accept,
manage and minimise.
Basically, business insurance falls into
three categories:
Assets and Revenue - things the business owns
and its revenue generating capabilities.
Liability - legal obligations arising from
injury to others or damage to their property.
Personnel - protection against loss arising from
personal accident or illness involving yourself or
your employees.
Below is an alphabetical list and brief
explanation of the types of policies most commonly
used by small businesses. All businesses are
different and their insurance needs vary
accordingly. Business insurance packages also vary
considerably.
Business Interruption - provides cover if
business is interrupted through damage to
property by fire or other insured perils. Cover
ensures ongoing expenses are met and anticipated
net profit is maintained through a provision of
cash flow.
Burglary - covers the following areas when theft
occurs involving violent, forcible entry: loss or
damage to stock, goods held in trust and all
contents for which you are responsible within the
premises. Note: It does not normally cover theft by
employees or others entitled to be on the premises.
Employment Practices Liability - a relatively
new type of insurance protecting employers against
claims and legal costs by employees arising from
allegations of inappropriate conduct in connection
with their employment. This could include, for
example, sexual harassment, wrongful dismissal, or
discrimination on the basis of age, race, sex or
religion.
Engineering Equipment - some plant must be
inspected and certified annually. Usually obtained
within an engineering policy, which covers equipment
against such risks as breakdown and explosion.
Fire & Perils - covers destruction of, or damage
to, your buildings and contents through fire and
other perils as lightning, explosion, malicious
damage, earthquakes, storm, and water damage. (Note:
Flood caused by an overflowing water course, such as
a creek or river, is not covered by most standard
fire and perils policies.)
Goods in Transit - cover against loss or damage
to your property while in transit, either within
Australia or on a worldwide basis (depending on your
needs).
Keyman Insurance - covers the company in the
event of the death or long-term disablement of a
“key person”, usually the owner or someone else
critical to the continued existence of the business.
Loss of Money - cash and items such as postal
orders, cheques and stamps are insured against theft
from business premises or while in transit.
Motor Insurance - all company/business vehicles
must be insured for third party injury liability. A
comprehensive policy will also insure for third
party property damage and own damage.
Personal Accident, Illness or Disability -
covers against your inability to work and the
resulting loss of income. Unless you operate as a
Proprietary Limited company, you personally will not
be covered by workers’ compensation.
Products Liability - if you sell, supply or
deliver goods, even in the form of repair or
service, you may need cover against claims of goods
causing injury or damage.
Professional Indemnity - businesses which supply
advice of any kind can be sued for financial loss
due to errors or omissions, and may therefore need
this protection.
Public Liability - very important. This covers
you against claims by people who may suffer injury
or damage to property while on your premises, or
while you are working at their premises.
Workers’ Compensation - this cover is compulsory
in all states and territories. It covers claims
arising from the death, injury or illness of
employees arising out of their employment (under
workers’ compensation law, or common law) and
includes legal costs.
In addition to those listed above, there
are other risks, which are relevant to the
particular nature of a variety of businesses. For
example:
Glass or sign breakage
Perishable food or other stock deterioration
Computers and computer records
Business machines and equipment
Legal expenses/tax audit
Fidelity guarantee
Product recall
Credit/bad debts.
Please note, the various risks mentioned
above do not constitute a definitive list. They are
an elementary guide to the type of insurance your
business may need.
Some organisations, especially larger
businesses or companies carrying on specific types
of high-risk work, often require their own specially
designed insurance and risk management programs.
Brokers provide these services too, designing the
policies, negotiating them with insurance companies
and then placing the cover with one or more firms.
Risk management programs are often part
of the process. Risk prevention and loss prevention
strategies often reduce the risks, thereby reducing
premium costs.
We suggest you talk to a broker to find
out exactly what cover your business requires.
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Premium Funding
The premium on a risk product is
required as soon as the insurer accepts the risk.
However, that often doesn't suit the client
business, which may prefer to spread the payments of
the premium over 12 months.
Premium funding can be arranged through
your insurance broker. This is a credit transaction
which is separate from the insurance transaction.
Specialist premium funding companies handle the
credit arrangements.
This means that if a client wishes to
cancel a contract of insurance during the period of
insurance, separate arrangements will have to be
made with the insurer and the premium funder.
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Consumer Rights
Under the legislation governing the
conduct of insurance brokers, they are required to
act in your interests. The broker acts on behalf of
the insurance buyer, not an insurance company. In
circumstances where they may be acting on behalf of
the insurer, the broker must inform you of that
fact.
Because insurance involves substantial
sums of money, as with other professional and
financial services, there are other measures in
place to ensure consumers are protected.
Membership of NIBA is one assurance that
your broker is committed to quality and service.
Senior staff members of any brokerage must be
Qualified Practising Insurance Brokers (QPIBs) and
undertake continuing professional development.
All brokers must adhere to the Financial
Services Reform Act, the Corporations Act and the
Insurance Brokers Code of Practice. They must also
abide by the decisions of Insurance Brokers Disputes
Ltd, which resolves problems between consumers and
brokers.
If you have an complaint regarding an
insurance broker, you can email the Insurance
Brokers Disputes Limited
info@ibdltd.com.au or call its consumer
relations manager on 1300 780 808 or visit
www.ibdltd.com.au. For more information on how
to lodge a complaint
click here.
Insurance Brokers Disputes Limited
(IBD)
This is a free consumer service designed
to handle complaints and help resolve problems
between insurance brokers and other financial
service providers (other than insurance companies)
and their clients. IBD provides support to help you
resolve problems quickly and efficiently, without
having to resort to costly litigation.
IBD is overseen by a board of directors
to ensure your interests are represented. The IBD
Board consists of an independent Chairman, Richard
Smith, formerly the Chief Manager for general
insurance with the Australian Prudential Regulation
Authority and Deputy Commissioner at the Insurance
and Superannuation Commission. The other board
members consist of two industry representatives,
NIBA Chief Executive Noel Pettersen and industry
representative and former NIBA broker Bob Elder; as
well as two consumer representatives, financial
counsellor Peter Gartlan and consumer lobbyist Jenni
Mack.
IBD Ltd covers policies including:
sickness and accident
life
travel
motor vehicle
home buildings and contents
consumer credit
personal and domestic property
small business policies
Please note, complaints against
insurance companies are handled by the Insurance
Ombudsman Service – call 1300 780 808 or visit
www.insuranceombudsman.com.au
This Information Provided Courtesy of:
National Insurance Brokers Association
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