Are you a broker?

This old-fashioned word has a specific legal meaning these days, and therefore cannot be applied to a couple of its traditional users: insurance brokers, whether they sell life and personal lines or fire and general insurance. This has earned more than a couple a friendly letter from the FMA suggesting, much to their surprise, that they should stop using the word.

But what it used to mean was that the adviser would take the client’s insurance requirement ‘to the market’. While brokers that actually took every potential case and approached the entire, eligible, universe of all insurers are probably every bit as mythical as, say, Unicorns, the practice is becoming very rare.

But what does taking a case to the market mean? The NZMBA, now merged with the PAA, used to require that members could deal with six lenders before they could claim to be ‘brokers’. But there are two problems with this definition.

For example, access is pretty easy these days. Many life insurance advisers would argue that they can access almost any company. One I spoke with last week actually has agencies with ‘only’ five companies – yet he cheerfully presents comparisons of nine to his prospects, rationalising that should a client choose one of the others then he can obtain the cover for them: either by quickly setting up an agency or by asking a colleague to handle the case.