Insurance Broker vs Buying Direct — What's the Difference?

When you need insurance in New Zealand, you have two main ways to get it: go directly to an insurer, or use an insurance broker. Both routes can get you cover, but they work very differently. Understanding the difference can save you time, money, and stress — especially if your situation isn’t straightforward.

This guide explains the key differences between brokers and direct insurers, the pros and cons of each, and how to decide which option suits you best.

What is a direct insurer?

A direct insurer sells policies straight to customers — no middle person. You deal with the company from quote to claim. Examples in New Zealand include AA Insurance, Tower, and State (via its direct channel).

Direct insurers often advertise heavily online and on TV. You get quotes quickly on their websites, and you manage your policy through an online portal or call centre.

What is an insurance broker?

An insurance broker works for you, not the insurer. Brokers shop around multiple insurers to find the best cover and price for your situation. They also help you with claims and policy changes.

Examples of New Zealand brokers include Crombie Lockwood, Rothbury, and Aon. Many brokers specialise in certain types of insurance, such as business, rural, or high-value home and contents.

Brokers are regulated by the Financial Markets Authority (FMA) and must follow the Financial Advisers Act 2008. They have a legal duty to act in your best interests.

Key differences at a glance

Feature Direct Insurer Insurance Broker
Who they represent The insurance company You, the customer
Number of insurers One (their own) Multiple (shop around)
Cost Often lower headline prices May include broker fees or commission
Claims help You deal with the insurer directly Broker handles the claim for you
Cover complexity Best for simple, standard needs Better for complex or unusual risks
Regulation FMA and Reserve Bank FMA under Financial Advisers Act

Pros and cons of buying direct

Pros

  • Fast and easy. Get a quote online in minutes. No meetings or phone calls needed.
  • Lower headline prices. Direct insurers often have competitive standard rates, especially for straightforward cover.
  • Full control. You manage your policy online — add or remove cover, update details, and lodge claims yourself.
  • No broker fees. You only pay the premium, with no extra service charges.

Cons

  • Limited choice. You only see one insurer’s products. You might miss better cover or price elsewhere.
  • No personalised advice. Call centre staff follow scripts. They can’t tailor cover to your unique situation.
  • Claims can be stressful. You handle the claim alone. If it’s complex or disputed, you have no advocate on your side.
  • Not ideal for complex needs. If you have a high-value home, multiple properties, or a business, standard policies may leave gaps.

Pros and cons of using a broker

Pros

  • Access to multiple insurers. Brokers compare policies from several companies to find the best fit.
  • Tailored advice. A broker asks about your situation and recommends cover you might not have considered.
  • Claims support. Your broker handles the claim process, negotiates with the insurer, and advocates for you.
  • Expert knowledge. Brokers understand policy wording, exclusions, and industry trends. They spot gaps you might miss.
  • Long-term relationship. Your broker reviews your cover annually and adjusts it as your life changes.

Cons

  • May cost more. Some brokers charge a fee on top of the premium, or they earn commission from the insurer (which is built into the price).
  • Slower process. Getting a quote takes longer because the broker gathers information and shops around.
  • Less control. You rely on your broker to manage the policy. Some people prefer to handle things themselves.
  • Not always needed for simple cover. If you just want basic car or contents insurance, a broker may be overkill.

How broker fees work in New Zealand

Brokers can charge in two main ways:

  • Commission. The insurer pays the broker a percentage of your premium. You don’t see this as a separate charge, but it’s built into the price.
  • Broker fee. Some brokers charge a flat fee (often $50–$200 per year) for arranging your policy. This is disclosed upfront.

Always ask your broker to explain their fees in writing. Under FMA rules, they must tell you how they’re paid.

Step-by-step guide: How to choose between a broker and direct insurer

  1. Assess your needs. Is your situation simple (e.g., single car, standard home)? Or complex (e.g., rental properties, business, high-value items)? Simple needs often suit direct insurers. Complex needs usually benefit from a broker.
  2. Compare quotes. Get at least three quotes from direct insurers online. Then contact one or two brokers and ask for a comparison. Don’t just compare price — compare coverage limits, exclusions, and excess amounts.
  3. Check broker credentials. Use the FMA’s Financial Service Providers Register (FSPR) to verify the broker is licensed. Look for a broker who specialises in your type of insurance.
  4. Ask about claims support. Ask the broker: “How do you handle claims? Will you deal with the insurer directly?” For direct insurers, read their claims process online.
  5. Read the policy wording. Whether you go direct or through a broker, always read the policy document. Pay attention to exclusions and conditions.
  6. Review annually. Your insurance needs change. Set a reminder to review your cover each year — with your broker or directly with your insurer.

When to use a broker vs buying direct

Situation Recommended option
Basic car insurance (single vehicle) Direct insurer
Standard home and contents Direct insurer or broker (compare)
Multiple properties (rentals, holiday homes) Broker
Business insurance (liability, professional indemnity) Broker
High-value items (jewellery, art, collectibles) Broker
Life or health insurance Broker (can compare across providers)
You want the cheapest price, no frills Direct insurer
You want personalised advice and claims help Broker

Tips for getting the best outcome

  • Don’t assume a broker is always more expensive. Because they shop around, a broker can sometimes find a better deal than you’d get direct — especially for bundled policies.
  • Ask about disclosure. If you have a previous claim or conviction, tell both the direct insurer and the broker. Non-disclosure can void your policy.
  • Use comparison websites. Sites like or can give you a broad view of direct insurers. But remember, these sites don’t include all brokers.
  • Consider a hybrid approach. Some people use a broker for their home and business, but buy car insurance direct. That’s perfectly fine.

Verdict

There’s no single right answer. If your insurance needs are straightforward and you’re comfortable handling claims yourself, buying direct is often the cheapest and quickest option. But if your situation is complex, you value expert advice, or you want someone to fight your corner during a claim, a broker is worth the extra cost.

The best approach? Get quotes from both sides and compare them carefully — not just on price, but on the cover and service you’ll receive.