The economic value of insurance broking
The report notes client’s concerns about a lack of genuine choice for insurance in these regions. While some clients tried to negotiate with insurers directly, or switch between insurers to find cheaper insurance, these activities were reported to have little impact on premiums. The inquiry notes that some individuals reported success using brokers to obtain insurance in an otherwise difficultto-insure area:95 “In submissions to the inquiry and at the public forums, many residents expressed views about a lack of genuine choice for them in northern Australia. People discussed their efforts to negotiate with insurers, switch between insurers and use brokers to find cheaper insurance. However, they generally found that these activities had little impact on their premiums. Some individuals reported success using brokers to obtain insurance in an otherwise difficult-to-insure area, however, not everyone had the same success.” (Australian Competition and Consumer Commission) Where brokers can provide clients in these areas with access to insurance, there is a social and economic benefit related to clients’ ability to financially cover from disaster events. Brokers also have the knowledge and capacity to place business with overseas markets when local markets are difficult to access, thereby giving local clients access to the global insurance market. Business commonly placed overseas includes policies relating to very large risks, highly specialist risk types and risks where policies are not available in the Australian market. In some cases, the client requires Australian risks to be included as part of a global insurance program located outside Australia (see Section 2.2.3).
National Insurance Brokers Association
5.3 Supporting local communities In addition to serving their clients’ insurance needs, brokers play an active role in their communities. On average, the brokerage businesses across Australia donate over $25,000 per year to charitable and other social causes. Each surveyed brokerage also spends an average of $20,000 in their local communities, by sponsoring events or fundraisers. Just under a quarter (23%) of surveyed brokerage businesses also made a positive impact on their communities through social impact investing. On average, these brokerages invested more than $10,000 in social enterprises. In addition to monetary donations, brokers also provide their time to volunteer for community or charitable causes. These contributions include providing in-kind services to local communities (for example, arranging insurance for a local sporting team without taking commission). On average, surveyed brokerages reported an average of more than 400 staff hours in volunteering for charities, and more than 150 additional hours in volunteering for other causes. Volunteering initiatives are more concentrated in some brokerages, suggesting the value of larger businesses organising programs for employees to donate their personal time for volunteering and assisting non-profit organisations.96
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