Insurance Broker vs Direct Insurance: Which Is Better for You?
Should you buy insurance directly from an insurer or use a broker? This guide compares both approaches, explains when a broker adds value, and helps you make an informed decision about your personal or business insurance.
The Two Ways to Buy Insurance in Australia
When purchasing insurance — whether home, car, business, or professional indemnity — Australians have two main options:
- Direct: Buy a policy straight from an insurance company (e.g., AAMI, Allianz, QBE)
- Broker: Use a licensed insurance broker who compares policies across multiple insurers
Both approaches have advantages, and the right choice depends on the complexity of the insurance needs.
When Direct Insurance Works Well
Buying direct is often suitable when:
- The insurance need is simple and standardised (e.g., basic car insurance)
- You know exactly what cover is needed
- Price is the primary concern and you're comfortable comparing policies yourself
- You prefer dealing directly with the insurer for claims
When a Broker Adds Value
An insurance broker typically adds the most value when:
- Complex needs: Business insurance, professional indemnity, or multi-policy portfolios
- Claims advocacy: Brokers act on your behalf during the claims process
- Market access: Brokers access products not available to the public directly
- Risk assessment: A good broker identifies coverage gaps you might miss
- Time savings: Instead of comparing 10 policies, the broker does it for you
Understanding How Brokers Are Paid
Insurance brokers in Australia are typically paid through commissions from insurers (usually 10–20% of the premium). Some brokers also charge a broker fee on top. Always ask:
- What commissions will you receive on my policy?
- Do you charge an additional broker fee?
- Do you have a preferred insurer panel, and if so, why?
How to Choose a Good Insurance Broker
- Check they hold an Australian Financial Services Licence (AFSL) or are an authorised representative
- Ask about their insurer panel size and any volume-based incentives
- Look for industry specialisation if you have niche needs
- Request references or case studies
Compare Brokers Through MyMoney®
Rather than calling brokers one by one, post a brief on MyMoney® describing your insurance needs. Verified insurance brokers compete with transparent proposals — so you see their approach, panel, and fees before committing.
This article provides general information only and does not constitute personal financial advice. Consider whether the information is appropriate for individual circumstances before acting on it. MyMoney® Marketplace is operated by Global Mutual Funds Pty Ltd (ABN 20 090 555 436, AFSL 222640).