Insurance Brokers: directory of firms

The insurer underwrites the risk, sets the terms and pays the claim. Its financial strength and its claims handling are what you are ultimately buying. The broker selects and arranges, and is the party you can hold to account for the advice about what to buy.

Price comparison sites are intermediaries too, and they must be authorised. What they do not do is ask enough about you to establish whether a policy fits. Two policies at the same price can differ on excess, on new-for-old settlement, on accidental damage, on cover away from the premises and on how a total loss is calculated.

Buying direct from an insurer removes a layer of cost and a layer of help. It is reasonable for straightforward risks. It is a poor idea where the risk is unusual, where the sum insured is hard to calculate, or where a declined claim would be serious.

Before the contract is concluded, an intermediary must give you its identity and address, confirm that it is registered, and tell you whether it is acting for you or for the insurer. It must also disclose if it holds ten per cent or more of the voting rights in an insurer, or an insurer holds that in it.

It must then say which of four things it is doing: giving a personal recommendation on the basis of a fair and personal analysis of the market; advising while contractually obliged to place business with one or more named insurers; advising without such an obligation but without a personal recommendation, naming the insurers it can use; or simply providing information. Firms claiming a fair and personal analysis should maintain a broad panel, kept current.

Check the Financial Services Register for the firm's insurance distribution permissions and for any appointed representative relationship, and use the contact details shown there.

On every insurance sale the firm must specify your demands and needs on the basis of information obtained from you, and communicate that statement to you before the contract is concluded. The proposed policy has to be consistent with those demands and needs whether or not advice is given.

In practice the statement can be embedded in an application form, included in the product documentation, or provided as a written record of what was discussed. Read it, because it records what the broker understood about you. If it says you needed cover for public liability and you actually needed professional indemnity, that is the document that will settle the argument later.

Brokers are usually paid a commission by the insurer out of the premium, and many also charge an administration or arrangement fee. Ask how the firm is paid, and ask whether the fee applies again on mid-term adjustments and cancellations, which is where small charges accumulate.

Premium finance deserves separate attention. Paying monthly is a credit agreement with its own interest rate, and it is arranged by a lender rather than by the insurer. Ask for the total payable over the year alongside the annual premium so you are comparing the same thing.

Consumer and commercial buyers are held to different standards. A consumer's duty is to take reasonable care not to make a misrepresentation to the insurer, a duty introduced by the Consumer Insurance (Disclosure and Representations) Act 2012, which replaced the older obligation to volunteer material facts.

A business buying commercial insurance is held to the Insurance Act 2015 instead, which requires a fair presentation of the risk. That is a wider obligation. It reaches what the business ought to know as well as what it actually knows, and it governs how the information is organised, not merely whether it was sent.

Remedies for a breach depend on whether it was deliberate or reckless, and on what the insurer would have done had it known. That is why an accurate proposal matters more than a cheap one, and why your broker should be pushing you to disclose more rather than less.

Premiums you pay a broker are protected in one of two ways. Under risk transfer the broker holds the money as agent of the insurer, so once you have paid the broker you have paid the insurer even if the broker later fails. Otherwise the money must be segregated in a client account held on trust, which cannot be used to pay the firm's own creditors.

The FCA requires the arrangement to be documented and agreed in writing, so ask which one applies to your policy. It is the difference between having paid and having to pay twice.

If an insurer fails, the FSCS protects most general insurance claims at 90 per cent with no upper limit for failures after 8 October 2020, and compulsory insurance, such as employers' liability and third party motor, at 100 per cent. Long-term insurance, including life and annuities, is also protected at 100 per cent.