Direct insurers versus brokers – who offers the better deal?

There are many direct insurers that claim that cutting out the middle man, i.e. the broker, will save consumers money. But is it really true that brokers are more expensive than direct players when it comes to premium as well as excess?
 
Justmoney journalist Jessica Wood compares car insurance quotes from five different insurers and five brokers to see who offers the best premiums and the least amount of excess.
 
The age old question
 
Insurance companies are wary of insuring youngsters. We (the under 25s) carry with us more risk probably because we haven't been driving for that long and in some instances we are considered more reckless and prone to drinking and partying. It's unfair to stereotype young people in this way but this is how some in the industry calculate risk.
 
Two years ago Moneybags, our sister website, conducted a similar survey on brokers vs. direct insurers but as our writer was exactly 25 he was able to obtain more quotes than I was able to. Some brokers refused to quote me because I am under the age of 25 [read: not an ideal candidate to insure]. But five direct insurers and five brokers did quote me and these are the results:
 
Insurers:

 
Brokers:

 
Analysing the results
 
Overall, the direct insurers are slightly cheaper on average than the brokers. Direct players had an average premium of R379.79 compared to the brokers at R403.72 - a difference of R23.93 or 5.93%. The cheapest premium I was offered was from Incompass Insurance Consultants at R263.41, however, the highest quote came from insurance broker, 1^st Insurance Brokers at R523.56.
 
However, brokers were able to get me a better deal on excess costs than direct insurers – with an average difference of R706 or 19.97%. Interestingly, one of the brokers, Contemporary Insurance Brokers, provided me with a quote with an excess waiver, which means that rather than pay in the basic excess when I make a claim, there is a monthly excess waiver fee included in the monthly premium, which covers this cost.
 
Applying for vehicle cover is tedious exercise if you are going to compare quotes. I found that dealing with the insurance agencies directly was a much easier way of getting a quote as they take your details over the phone, and can give you a quote while you are on the line with them.
 
Insurance brokers, on the other hand, require you to fill out forms or send through your details in some form, after which they contact several insurance agencies on your behalf and get the best deal for you. This takes a minimum of a day, and sometimes two.
 
The industry still has much to learn about how to treat customers. Some insurance brokers never got back to me, even after taking my details. However, I had similar situations with two insurers that I phoned.
 
Some brokers wanted to sell me more products by combining car and home insurance and refused to assist me if I did not take out both. My age counted against me too as some brokers said that none of the insurers they work with will cover me because I am under 25 years of age.
 
My tips following my experience:
 
1.It is important to find out if you get any rewards if you don't claim for an extended period. OUTsurance for instance awards you an OUTbonus, which consists of 10% of your monthly premiums back if you don't claim for three consecutive years.
 
2.To cut premium costs you can refuse to pay an excess waiver. However, you then run the risk of paying some excess in the event of an accident. Consider this option if you are a good driver and if you want to save on monthly costs.
 
3.I thought it was worthwhile to shop around for the best deal.
 
4.Dealing with direct insurers was easier and on average they offered a cheaper premium than the insurance brokers. But insuring through an insurance broker gives you a point of contact when you have a problem. The broker will contact and deal with the insurance company on your behalf, removing some of the stress and hassle of having to communicate with them yourself.
 
What did I tell the insurers and brokers?
 
I am a 23 year old working professional who still lives at home. I drive a 2011 silver Hyundai Atos 1.1 GLS which was purchased new from the car dealership. As my car is financed it can be insured at the retail value of R59 200.
 
When I phoned for quotes I was asked the following questions to which I replied with the following:

• How long have you been insured? – Four years
• Have you made a claim in the past three years? – Yes, but with the other person's insurer because they drove into the back of my car
• When was your driver's licence issued? – August 2009
• Where do you park your vehicle? – An accessed controlled area
• How far do you drive to work? – 30km
• What do you use your vehicle for (business or personal)? – Personal (to work and home)
• Has your engine been modified? – No
• Have you had any extra fittings added to your vehicle? – No