Direct insurance or broker: Which is better?
Raj Kiron Das: Bangladesh’s economy is getting higher rapidly across manufacturing, export-led industries, infrastructure development, transport network, logistics and digital commerce. This growth is transforming how businesses operate, but it is also expanding the scale and complexity of risk. Fire incidents, industrial accidents, extreme weather events, supply chain disruption, cargo loss and damage, workplace liabilities, financial fraud and cybercrime are no longer one-off threats. They increasingly interact, turning a single incident into a chain reaction that may disrupt production, delay delivery commitment, trigger penalties, damage reputation and erode investors’ confidence.
In this situation, insurance is shifting from a compliance-driven purchase into a strategic factor of resilience. It has become closely tied to business continuity, capital protection and long-term stability. Yet when it comes time to buy coverage, many businesses and individuals face a decision that often determines whether insurance will truly work when it is needed most: whether to purchase directly from an insurer or through a broker.
The question is frequently framed as a matter of convenience and value. Direct channels may appear faster, simpler and more accessible, particularly as Bangladesh’s insurers expand digital platforms and accelerate quotation and renewal processes. For individuals and smaller firms aspiring standard coverage, direct purchase may be practical. Motor policies, basic fire protection and straightforward health plans are often easier to understand, easier to renew and easier to manage without external support. Many buyers also prefer the feeling of control that comes from dealing directly with the insurer, handling documentation, payment and renewal on their own terms.
But the value of a policy is rarely measured at the point of purchase. It is measured when a loss occurs, a claim is submitted and the customer discovers whether the policy responds as expected. This is where the difference between direct purchase and broker-led placement becomes most visible, particularly for businesses operating in complex risk environments like garments and textiles, construction, import-export, logistics and the economic sector.
Brokers are often misunderstood as intermediaries who simply connect buyers and insurers. In reality, their most important function is advisory. Although they operate between the two parties, brokers are typically responsible to the policyholders, not the insurers. Their role often begins with risk understanding rather than policy selection. They assess the nature of the business, the structure of assets, operational vulnerabilities, prior loss patterns and the likely impact of disruption. This enables them to build coverage structures that are aligned with actual exposure rather than generic assumptions. They compare offerings across the market, identify weaknesses in policy terms and negotiate conditions like exclusion, deductible, and liability limit that may later determine whether claims are accepted or reduced.
The greatest advantage brokers bring, particularly in Bangladesh’s commercial landscape, is claims support. Claims success depends on how well a loss is documented, how accurately it fits the policy wording and how effectively it is presented under insurers’ requirements. Many of the market’s common frustration stem from the gap between what buyers believe is covered and what policy terms actually allow. A policy may be valid, but the loss could fall into exclusion. Coverage may exist, but the limit may be too low. The buyers may have complied operationally, but documentation may not meet the insurer’s standards. Brokers reduce these risks by preparing clients before losses happen and guiding them through the claims process when losses do occur.
The garments and textiles sector demonstrates the risks clearly. A fire or machinery breakdown is rarely just an asset loss. It can stop production, delay shipment and trigger financial penalties from overseas buyers. It may also damage long-term commercial relationships. A standard fire policy may not cover critical consequences like business interruption, electrical breakdown, or stock valuation dispute. Brokers tend to approach such exposure as interconnected and design packages that address both structural damage and operational disruption. Direct purchase may still work, but only when buyers fully understand the technical term and ensure that coverage reflects the full cost of downtime, not only the cost of damaged property.
Cargo and freight insurance has also become increasingly important as Bangladesh’s trade activity grows. Risks differ across ports, inland routes, handling practices and commodity types. Claims outcomes may depend heavily on shipping documents, packing standards and policy conditions tied to transit methods. A policy that looks adequate may fail in practice if the cause of loss is disputed or if documentation requirements were not anticipated. Brokers often add value by aligning coverage with the practical reality of each shipment and supporting clients through the documentation and claim submission process.
Meanwhile, financial fraud, employee dishonesty and cyber threat represents a rising class of risk that demands careful policy design. These policies are often conditional and proof-driven, requiring internal control to align with policy requirements. If the policy and the organisation’s internal system do not match, claims may become difficult to validate. Brokers in this area often help firms understand how to strengthen internal processes so coverage remains effective, turning insurance into a workable safeguard rather than a symbolic purchase.
The market is moving toward a hybrid future. Direct channels will continue to expand through digital convenience and faster service. At the same time, broker-led advisory models will remain necessary for high-risk and specialised sectors where policy design and claims readiness determine commercial survival. For Bangladesh’s complex-risk industries, brokers often provide the most reliable path because they connect insurance to operational reality and improve the likelihood of successful claims. For lower-risk buyers with standard needs, direct insurance can be efficient and cost-effective, provided buyers understand what they are buying and what will be needed when a claim is made.
