Insurance brokers are full-time intermediaries offering insurance service on the basis of professional expertise and competence. An insurance broker acts as intermediary for the insured but usually remunerated by a commission from the insurer.
Though most insurance brokers specialize in placing commercial insurance businesses, there are brokers out there that also cater for non commercial clients like you and I.
In carrying out their mediation role, the key function of the broker starts with understanding the needs of the client, the risks the client is exposed to and the customer’s insurance needs. Essentially just as we divulge all relating to an illness or condition when we visit the doctor to enable the doctor diagnose and then prescribe a cure, in a similar way the client must be open with the broker so the latter is able to highlight risks the client may be exposed to and thus recommend appropriate insurance protection.
Brokers are responsible jointly with their principal i.e. the client in ensuring that insurers are fully informed of all material facts necessary to underwrite any class of insurance.
Other important function the broker performs include:
checking and in some cases issuing policies
assisting in the negotiation of claims / liaise with loss adjusters
negotiating with insurers on the client’s behalf
acting promptly on instructions from the client /providing progress report
Some struggle with insurance transactions for different reasons ranging from the failure to thoroughly understand the insurance policy document which is the evidence of the contract, to the inability to understand the sometimes intricate nature of the insurance mechanism.
This difficulty with insurance from the inception of the contract manifests usually to the detriment of the insured when a loss is reported and the insurer adjudges same inadmissible under the terms of the policy document.
Taking advantage of advancement in technology, the insurance broker is able to compare a variety of insurance policies as well as competitive rate at the touch of a button and unlike the comparison websites, the client gets a tailor-made policy at a premium/price that is competitive.
The insurance brokers’ roles in assisting their clients arrange the appropriate insurance protection, continually reviewing cover requirement and updating same with insurers cannot be understated. With the appropriate insurance protection in place, the broker is also able to easily ensure that valid insurance claims are not only paid but paid promptly too.
Having a broker handle your insurance arrangements is like out-sourcing that aspect of your task. For a commercial client, this is equivalent to having a full department that caters for everything about insurance with that client not having to worry about the cost of running the department.
The broker accepting the responsibility is eager to impress as this might earn him referrals in addition to commission and as insurance brokers are closely supervised by the Financial Services Authority, the broker also has a duty to ensure that service level and conduct conforms with strict guidelines of the regulatory authority.