Insurance brokers and underwriters

ro1892

I've been looking at insurance quotes for my car renewal and have a query regarding how it works with brokers and underwriters. Some of the cheaper quotes coming up are from company X but then when you click through it says underwritten by insurer Y.

Am I right in thinking that they are brokers and the insurance policy will actually be with the underwriter?

So when looking at reviews, I really need to be looking at reviews of both the broker and the underwriter?

Are there any other things I need to be aware of when going through a broker? I assume if I needed to claim or had any issues with documents etc, I'd be contacting the broker rather than the underwriter?

DullGreyGuy

ro1892 said:

I've been looking at insurance quotes for my car renewal and have a query regarding how it works with brokers and underwriters. Some of the cheaper quotes coming up are from company X but then when you click through it says underwritten by insurer Y.

Am I right in thinking that they are brokers and the insurance policy will actually be with the underwriter?

So when looking at reviews, I really need to be looking at reviews of both the broker and the underwriter?

Are there any other things I need to be aware of when going through a broker? I assume if I needed to claim or had any issues with documents etc, I'd be contacting the broker rather than the underwriter?

Its unfortunately much more complex than that.

The insurer/underwriter, in the purist term, is the company who is ultimately liable to you to ensure you claim is paid. They will be authorised by the PRA (unless overseas) and regulated by the FCA and PRA.

There are a wide range of different types of intermediaries out there and their roles can vary significantly...

• Traditional Broker - sells off the shelf solutions from a range of insurers, potentially any insurer.

• Non-traditional broker/intermediary - has created a standard set of terms and has a panel of insurers with different pricing to choose from

• MGA - they have delegated underwriting authority from one or more insurers. They can sell direct or via brokers, some set prices others dont

• Wholesale Broker - similar to an MGA but often with less delegation and only sell via other brokers

Some may have delegated complaints and claims handling authority from the insurer others will have no involvement in claims at all. 

In addition there are a few other concepts:

• Consortium - where multiple insurers agree to work together on insuring risks and one is the Lead who does all the pricing, terms etc and the rest are follow

• Whitelabel/affinity - any of the above can operate under a different brand either a internally held brand or a third party company who wants to offer their own branded insurance to their customers

• TPA/third party administrator/outsourcer - a company that provider some or all of the day to day operations of any of the above

So take Direct Line as an example... Direct Line these days is simply a brand, UK Insurance is actually the legal entity behind it and is sold direct to the public, same with their sister brands Churchill, Privilege etc.


RAC Car Insurance is a white label, the company you actually speak to is Budget, which is an example of a non-traditional brokerage where they have a range of insurers but they are all quoting on standard terms. 


It can be difficult to work out from the outside who you'd actually be dealing with in the event of a claim etc and in some cases it may depend on what type of claim you make. So we buy our Home insurance from M&S which is a white label of Aviva, we recently made a claim and because it was for mobile phone they passed it to Davies Technology to actually manage the claim 

cw8825

if its the broker who is responsible for managing the policy, you need to look at their terms and what charges they would have

IMO the reviews on the underwriter are less helpful as many times, a bad review is because the claim was not paid(usually because the customer hasn't met the terms of the policy)

ro1892

Thanks for the detailed replies. Seems a lot more complex that I first thought!

Am I right in thinking that if I go via a broker then the terms etc could be different than if I went direct to the underwriter? For example, my insurance search results list a policy from Lancaster Insurance which is underwritten by LV. I assume that this would have different conditions, terms, policy wording than if I went to LV direct?

XRS200

ro1892 said:

Thanks for the detailed replies. Seems a lot more complex that I first thought!

In reality the vast majority of consumers buy direct from an insurer or via a single intermediary.

XRS200

ro1892 said:

Am I right in thinking that if I go via a broker then the terms etc could be different than if I went direct to the underwriter? 

Correct. No idea if that is the case for your example though

DullGreyGuy

ro1892 said:

Thanks for the detailed replies. Seems a lot more complex that I first thought!

Am I right in thinking that if I go via a broker then the terms etc could be different than if I went direct to the underwriter? For example, my insurance search results list a policy from Lancaster Insurance which is underwritten by LV. I assume that this would have different conditions, terms, policy wording than if I went to LV direct?

In principle they can be totally different, as mentioned above a non-traditional broker will have terms they've created themselves so totally divorced from the insurers own terms. If its a traditional broker then they are selling different products with different terms set by the underwriters; that isn't to say all terms are going to be identical between a direct and distributed policy but they are more likely to be the similar... some however may have intentional points of differentiation so broker and direct have slightly different selling points

Having to apply lots of different T&Cs however is costly as it means your claims teams have to be better trained, or systems developed to differentiate policy types and more chances of making a mistake. One way to avoid this is to outsource or delegate authority so a non-traditional broker may deal with claims up to £50,000 and so the underwriters front line claims people dont have to learn hundreds of different policy wordings. 

XRS200 said:

ro1892 said:

Thanks for the detailed replies. Seems a lot more complex that I first thought!

In reality the vast majority of consumers buy direct from an insurer or via a single intermediary.

Depends on the class, for Motor its more common for it to be so, if you count a white label broker as a single intermediary. For Home etc then no, the MGA model is increasingly common and many MGAs sell direct and via brokers.