How insurance is sold
By Sally Praskey, Editor, Insurance Canada ConsumerInfo
It may seem that everywhere you turn these days, someone, somewhere, is hawking some kind of insurance, whether it be through television, over the Internet, on the phone, through the mail, or plastered on billboards. However, there are actually only four main channels through which insurance is sold. While any of the following could meet your needs, you should choose the one that is convenient for you and with which you are most comfortable. Throughout this Web site, we use the general term "insurance provider," so as not to favor any one of these channels over another.
Brokers – An insurance broker sells the products of several different insurance companies, and can therefore offer a variety of choices. However, no one broker represents all the companies, so if you want a wide range of quotations, you should consult more than one broker, and ask which companies each one represents. Some brokers are licensed to sell both property/casualty and life/health insurance products, while others sell only one of these two main types of insurance.
Agents – An agent represents only the products of one insurance company. Companies that use their own "captive" agents to sell their products are called "direct insurers." While an agent may not be able to provide you with access to as many products as a broker could, most direct insurers offer a wide enough range to meet the needs of most consumers, at a competitive price.
Direct sellers – Also called "direct-response insurers," these are the newest kids on the block. Like direct insurers who operate through local agents, direct sellers generally sell only the products of their particular company. However, what distinguishes them from direct insurers is that their products are sold via telephone from a central location known as a "call centre," rather than through local agents.
Group plans – Although any of the above channels may supply group insurance, consumers buy it through their workplace, alumni association, professional association, or other group affiliations. Group insurance is generally less expensive for both the insurer and the consumer, because it is sold in quantity to a relatively homogeneous group.
Many brokers, direct insurers, and direct sellers are now promoting insurance over the Internet, offering quotations and, in some cases, even selling insurance online. While this is a convenient service that will no doubt continue to increase in popularity, the watchword for consumers should be "buyer beware." As you will see from the articles posted on Insurance Canada ConsumerInfo, there are many options when it comes to buying insurance. The key is to get the right coverage at the best price. When shopping for insurance over the Internet, make sure you're comparing apples with apples. All policies are not alike, and the lowest price may not be the best coverage for you. It's important to ask the right questions before you buy your insurance, or you could be left high and dry at claims time.