Economic Value of Insurance Broking Report
As part of NIBA’s efforts to promote the role and value of general insurance brokers, NIBA commissioned Deloitte Access Economics to prepare a report examining the economic impact of the general insurance broking industry. This comprehensive analysis of insurance broking in Australia highlights brokers' value to clients, insurers, the economy and broader society. The report supports NIBA's advocacy efforts for a measured, evidence-based approach to regulating general risk advice.
Value to Clients
Brokers are experienced risk advisers, whose expertise and knowledge allow clients to access policies not available in the direct market. The matching process that brokers perform allows them to obtain cover more suited to the clients’ reducing the risk of underinsurance.
Brokers act as advocates for their clients both during the purchase of insurance and in the event of a claim. Broker clients are more likely to achieve favourable claims outcomes than those in the direct market with a survey of SME clients showing that broker clients were twice as likely to be fully covered for their claims than direct buyers.
Value to Insurers
Brokers support insurers to reach new clients and reduce the costs of product distribution and administration. Many insurers rely heavily on brokers to distribute their products across different markets, especially in regional areas where insurers may not have a physical presence.
Brokers facilitate better matching between insurer products and client risk profiles, enabling insurers to effectively and confidently price and assess risks. Insurers identified that this ability to find customers and efficiently assess their risk profiles was a key value of the intermediated model.
Brokers also support insurers by helping to identify new and emerging risks and insurance needs. Examples of emerging product opportunities identified by brokers include pollution coverage for construction businesses, cyber risk for businesses and products to cater to emerging industries.
Value to the Economy
The insurance broking industry contributes significantly to the Australian economy. In the 2018-19 financial year, the intermediated insurance industry contributed an estimated $2.6 billion in gross value add (GVA) to the Australian economy. This is roughly equivalent to the contribution of each of the gas supply and creative arts industries. Brokers facilitate an efficient insurance market, supporting economic recovery and stability across a range of sectors.
Value to Broader Society
Brokers play an important role in reducing underinsurance. By ensuring risks are adequately insured and managed, businesses and the communities they serve can recover more quickly if an insurable event occurs.
Brokers also play a key role in finding solutions for difficult-to-insure risks, particularly in markets where there is limited access to insurance products. Brokers work with clients and insurers to reduce instances of underinsurance and non-insurance, this reduces the burden on governments and society.
