What is the role of Insurance Brokers?

An insurance broker is the middlemen between the insurance company and the customer and markets insurance policies on behalf of the insurer. He is a professional who is required to give priority to his clients and provide objective advice that should not be influenced by any insurance company. In this way, he functions in a manner that is similar to your lawyer or your accountant and the advice that he provides is based on years of training, professional knowledge and experience. Insurance can be quite complicated and, like so many other things in life, the cheapest insurance is not necessarily the best insurance at or the insurance that suits your particular requirements. In deciding on your insurance and your insurer, you have to take into account a number of factors such as the exact wording of the policy, the exact nature of cover and the standing of the insurance company. Because an insurance broker deals with several different insurance companies, he is completely familiar with the different kinds of wording and the different kinds of cover. You can expect professional and impartial advice on what is best for you and indeed whether you should consider self insurance or non-traditional insurance products. Naturally, he will get you the best possible deal within the limitations of your budget.

In many parts of the world, insurance broking is connected with general insurance (also called non life insurance) and you would normally use an insurance broker such as house or car insurance though brokers also operate in the field of life insurance and investment insurance. Insurance brokerage is generally regulated and brokers need to be licensed or accredited in many parts of the world which means that small outfits can compete on level terms with the larger ones. Research has shown that insurance brokers offer substantial help in property and casualty insurance as well as the provision of health insurance and especially for small companies or businesses who lack the professional skills. Though this is a highly technical point, the difference between an insurance broker and an insurance agent is that the agent is an agent of the principal who is the insurance company and many people argue that the primary responsibility of the agent is to the insurance company and not to the buyer of insurance.

On the other hand, the insurance broker has no specific allegiances to any particular insurance companies and it can be argued that this helps him to play a more professional role in the buying of insurance. Since the broker is ultimately paid by the insurance company, he has to strike a delicate and difficult balancing act between loyalties to his insurance buyer band to the insurance company who compensates him. However, the advances in technology and the competitive nature of the business means that the insurance broker is evolving into a true facilitator and, in the process, acts as the catalyst for establishing fruitful relationship with between himself , the insurance company and the insurance buyer. In earlier decades, the customer was often taken for granted but today he is the centre of attention for both the insurer and the insurance broker.

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