Proof brokers are better than direct insurers

The Financial Ombudsman Service reports that of the 25,000 plus disputes it handles annually, insurance brokers are responsible for a tiny fraction compared with general insurers and other advice professionals.

The Financial Ombudsman Service’s 2011-2012 annual review revealed it has accepted 25,298 disputes into its formal dispute resolution process, where a customer had not been able to resolve a dispute directly with their financial services provider. This was up 24% on the previous year.

When broken into sectors, general insurers were responsible for 7,591 complaints, second only to banks who accounted for 12,210. Life insurers also had 851 complaints.

General insurance brokers were responsible for a paltry 123 complaints and life insurance brokers mustered only 13. This means that general and life broker combined accounted for just 0.5% of all complaints received by the Financial Ombudsman Service in the last 12 months, while general insurers were responsible for 30%.

Underwriting agencies came out of the report well though, with just one complaint.

Insurance brokers also outstripped other finance professionals, including financial advisors/planners which had 949 complaints, managed investments scheme (MIS)/fund manager (375), non-cash payment system providers (433) and debt collector or buyer (794).

The results, which have been reflected in previous year’s Financial Ombudsman Service annual reviews too, further validates the claim that clients are overwhelmingly in better hands when using an insurance broker.

Published on Insurance Business Website – By Trevor Treharne | 26/11/2012