Insurance broker is a type of insurance intermediary approved by the Insurance regulatory and development authority of India to carry out insurance operations in India. Insurance brokers have to obtain a license from IRDA before souring insurance business. There are 3 types of insurance brokers in India:- Direct insurance brokers who deal with the life and non-life insurance business, Reinsurance brokers who deal with the reinsurance business, composite insurance brokers who act as direct brokers as well as reinsurance brokers.
Insurance brokers are the only intermediaries who can be held legally liable for the deficiency of services in addition to the insurance company. Other intermediaries cannot be held legally and solely responsible for any deficiency in services. Insurance brokers act as an intermediary between the insurance company and the customer to source the business and get a certain amount of commission for the business sourced. Insurance brokers can tie-up with any number of insurance companies as there is no limit on the number unlike other insurance intermediaries.
Below are the things which are done by an insurance broker:-
Provide multiple quotes: The main duty of an insurance broker is to source insurance business for which the broker sources multiple quotes from the insurance companies on behalf of the customer. Customers dealing with any insurance broker get the advantage of multiple quotes compared to the other customers who deal with other kinds of insurance intermediaries. Since insurance brokers deal with multiple insurers they have the idea of what is available with whom, who can provide what. Based on this idea insurance brokers cater to the requirements of the customers.
Negotiate premium: The other duty of an insurance broker is to negotiate the insurance premium with the insurance company on behalf of the customer. Insurance brokers have an upper hand and skill in negotiations when compared to other insurance intermediaries. Insurance brokers help in reducing the premium with their negotiation skills. Negotiation can happen in the coverage and terms and conditions of the group health insurance policy as well.
After sales service & claim assistance: The other role of an insurance broker is to provide after sales service and claim assistance. After sales service includes servicing the customer after taking the group health insurance policy such as additions, deletions, endorsements etc. The claim assistance includes coordinating and settling the claims of the members of the group health insurance policies. Insurance broking is the best option to avail after sales service and superior claim assistance service.
Risk management: The other role of insurance broking companies is to provide risk management services. Insurance broking companies would have a strong understanding of the client’s business and build a robust risk management solution to cover the risks faced by the organization. For this the insurance broking companies would conduct an in-depth risk assessment with the client to identify the risk parameters that can harm the organization in the short run as well as long run. After the risk assessment the insurance broking companies suggest the best risk management practices to reduce the risk.