Insurance broker: what is it necessary for?This is an independent professional consultant whose aim is to present insurance products and to offer you just those products you need for solving your needs.
Basic tasks of insurance broker:
Insurance broker is dealing with the study of client’s needs to define specific requirements for new insurance products. Insurance brokers are always responsible to the insurant for their recommendations. Insurance companies highly appreciate a role of insurance broker as an independent professional consultant, always make concession to the broker and are ready for cooperation. They handle and cover risks of the broker’s clients.
What is the difference between an insurance agent and an insurance broker? Insurance agent is a representative of insurance company acting on its behalf. Insurance agents are individuals and corporate entities, including banks, travel agencies, car dealerships, and repair shops. Insurance agent represents an insurer’s interests only. It is acting on behalf and upon instructions of an insurance company, on the basis of an agency agreement or a permanent commission contract. Insurer is responsible for the conduct and activities of its insurance agent.
Insurance broker acts on its own behalf, upon instruction of other persons who need insurance services. It is operating on the basis of a brokerage agreement. The broker plays a role of an independent mediator, on the insurant side, and is free in choosing an insurance company. That is why it always bears a higher individual responsibility. It is operating on the basis of contractual relations with insurers. Uniqueness of intermediary services of insurance broker lies in the fact that it acts simultaneously for the sake of a client and insurer. Insurance broker performs functions inherent to any mediator: it substantiates the importance of a service; together with insurer it prepares an insurance contract; monitor compliance with the payment schedule and terms of contract prolongation; and administer client’s insurance contracts. It bears a double responsibility, to both parties. Insurance broker is paid with a commission fee by a client or by an insurer. In some countries, like the United States, this provision is guaranteed by the law. Insurance agent acts exclusively for the sake of insurer, is paid by and responsible to insurer only. |
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