What an insurance broker actually does, and how it differs from buying direct

There are three broad ways to buy insurance in Australia: through a broker, through an agent, or directly from an insurer. From the outside they can look similar — fill in some details, compare a quote, sign a policy — but the three sit on genuinely different sides of the transaction, and understanding which side you're dealing with is worth a few minutes before you commit.

A broker acts on behalf of the person buying the insurance, not the insurer. Their role is to assess the client's risk, compare options across a panel of insurers rather than just one, arrange the policy that fits, and generally help manage things if a claim needs to be made. To do this, a broker must be licensed under Part 7 of the Corporations Act 2001 — holding their own Australian Financial Services Licence (AFSL), or operating as an authorised representative of one.

An agent works differently. An agent markets and sells insurance products on behalf of a specific insurer, and operates under that insurer's own AFSL rather than a licence of their own. Broadly speaking, an agent represents the insurer's interests rather than yours, which matters most at the point where it counts — when a claim is being assessed.

Buying direct removes the intermediary altogether: you deal with the insurer's own staff or website, with no broker or agent in between. This can be a perfectly reasonable option for a straightforward, standard product — a single car policy or a simple home and contents policy — where you already have a clear sense of what cover you want. What you don't get is someone comparing the wider market on your behalf or negotiating terms; you're choosing from whatever that one insurer's own product offers.

Where a broker's value tends to show up more clearly is with complexity — business risk, multiple properties, unusual assets, or a claim that turns into a genuine dispute. One concrete example is working out an accurate sum insured for a rebuild rather than accepting a default figure. This matters in practice: consumer and regulatory research, including ASIC's own review of the home insurance market, has repeatedly found that a large share of Australian home owners — commonly cited at around 80% — are underinsured relative to what it would actually cost to rebuild their home, a gap that has widened further as building costs rose after a run of major bushfires and floods. Online rebuild-cost calculators exist and can be a reasonable starting point, but they generally can't account for site-specific issues such as a property's Bushfire Attack Level rating, which can add meaningfully to rebuild cost in higher-risk areas because of the fire-safety construction standards introduced after the 2009 Black Saturday fires.

None of this makes buying direct the wrong choice, or a broker automatically the better one — it depends on how complex your situation is, and how much value you place on having someone compare the market and help if a claim gets complicated.

This article is general information only. It does not take into account your personal circumstances and is not a recommendation to buy, hold, cancel or switch any insurance product. Before engaging an insurance broker or agency, you can check whether the business holds a current Australian Financial Services Licence, or whether an individual is an authorised representative of one, on ASIC's professional registers at asic.gov.au — general insurance is generally not covered by moneysmart.gov.au's Financial Advisers Register, which applies to personal financial advice. If you have an unresolved dispute with an insurer or broker, the Australian Financial Complaints Authority (AFCA) provides a free external dispute resolution service at afca.org.au. Our directory lists insurance brokers, insurance agencies and life insurance specialists across Australia by area if you are ready to start comparing your options.

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