Sporting organisations often ask what is the difference between using an agent or broker or dealing direct with an insurer.  In an effort to clearly define these issues, IEA's Joint Chief Executive Officer, Nigel Branson fields a few questions from Steve Haynes, CEO - Confederation of Australian Sport.

Steve: Why should sport use an insurance broker?

Nigel: An insurance broker's job is to assist with the complex questions which insurance raises.  An insurance broker offers convenience, choice and a trained knowledge of covers and policy limitations.

Convenience, because they normally handle all covers needed; Choice, because they deal with a number of underwriters (insurers) and will recommend the contract which best fits the circumstances, and Expertise, because insurance brokers spend their working lives learning about covers & they keep abreast of innovations which the sport administrator would not have time to learn.

Whether it be a sport or any other industry, it is wise to select a broker who has experience and expertise in that particular industry.

Steve: what is the difference between an Insurance Broker and Insurance Agent?

Nigel: There is a big difference.  The agent acts on behalf of one or more insurance companies and can only sell what they have to offer.  On the other hand, the Broker acts on behalf of the client and is legally obliged to act in the client's best interests, is not tied to any insure and is therefore, free to arrange the appropriate cover to suit the client's needs.

Steve: Wouldn't it be cheaper to go direct to the Insurance Company?

Nigel:  Experience shows that it is not any cheaper to go direct.  You are more likely to obtain greater value by dealing through a broker, since it is their vocation to obtain the coverage that best suit the client, and at a competitive market rate.

Steve: Most sports appear to consider price as the main criteria for purchasing insurance.  Is this wise?

Nigel:  No, as there are many cases where the covers are not compared like for like.  Cover can vary and this is usually reflected in the costs.  It's the insurance broker's job to obtain price quotes and present these with the best policy to meet the needs of the sport.

Steve: Are there any controls over Insurance Brokers?

Nigel: Yes, Under the Insurance (Agents & Brokers) Act 1984, all insurance brokers must be registered with the insurance and Superannuation Commission, a federal government authority.  To maintain registration an Insurance Broker must comply with a number of regulations, including holding professional indemnity insurance and proving their business is financially sound.

Nigel Branson, Chief Executive Officer
                                             Spring 2000