What is an insurance broker?
Insurance is not just selling – purchasing policies. Contracting insurance services requires professionalism and also good knowledge. The opinion according to which you can solve the problems related to risk and insurance management without knowing the law specific to the insurance activity and risk management is wrong. It requires qualification, experience and a professional approach.
But how to make a correct choice among the big number of commercial vehicle insurance brokers operating on the market? How to negotiate a good coverage at a minimum price? How to conclude a contract that would guarantee you to obtain compensation from the insurer upon the occurrence of the insured case? All of these, as well as the answer to other questions fall within determining the competence of an insurance broker. A broker has a special role, acting as an intermediary between the seller and the buyer of insurance services.
However, a contemporary broker is no longer a passive intermediary. In the past, the role of a broker was limited to helping the client in calculating the insurance premium and selecting the lowest quote on the market. Insurance brokers now operate with the client’s risks, on their behalf, being a consultant specialized in carrying out the risk management activities.
The contribution of the broker in the formulation and elaboration of the client’s risk management system diminishes the final price of the insurance policy. The broker, being the risk manager of the buyer of insurance services, represents in fact the form of the consumer’s presence on the market. Under current conditions, customers are becoming more demanding in relation to the component and quality of the insurance service. Thus, the broker is now able to organize the protection of the client’s patrimonial interests, by taking into account their particular character and interests.
Contemporary brokers, in their activity, must be able to accomplish the following functions:
- Advisory function, which includes: risk analysis and evaluation, elaboration of an adequate insurance program, management of the insurance process
- Operative function, which includes: placing the program on the insurance market, maintaining the coverage offered to the client, participating in the regularization of the damage on the part of the client, perfecting the documentation (drafting the contract projects, drawing up the final document, ensuring the circulation of documents between parties, the follow-up of the insurance contract etc.);
- Financial function, which involves redistribution of the insurance premium between insurers and reinsurers, collecting and transferring the amount of compensation to its client.
In order to successfully perform its responsibilities, the broker must know the insurance techniques for various categories of risks and the legislation – in other words, be an expert in the field of insurance legislation and practice. Also, they must know the market, which means being present on the market every day and making an opinion about each insurer, its reputation, the quality of the services and insurance products offered, the degree of financial security and its reliability. A broker knows about the market much more than the most educated client.