An insurance broker helps an individual to select and buy the right insurance for their family and themselves. They also help the companies, industries or any other businesses to get the right insurance. These brokers explain to you about the right policies for your needs and act as a mediator during the settlement of your claim.
Why do we need an insurance broker?
- To suggest a proper insurance coverage that can fulfill your requirements.
- To ensure that all the details related to the amount are correct without any hidden charges.
- To offer impartial guidelines about the coverage that fits appropriately in your budget.
- To explain the policy coverage clearly so that you can understand all the pros and cons of the policy.
- To give systematic documentation and help you in completing the paperwork, so that the coverage will not be delayed.
- To help in getting efficient services from the insurance company during the claim of the policy.
Who is an Insurance Broker?
- A consultant who guides an individual to secure their life, family and business by starting an insurance policy.
- Brokers advise the clients by keeping their interests in view.
- A person who helps to identify the risks in your individual or business and help you to insure, and manage those risks in a better way.
- They act as a technical advisor and are very useful during the claim.
- Brokers help you to pick the most appropriate insurance cover as they are aware of all the terms and conditions, coverage details, exclusions of the insurance policies.
- Insurance brokers prepare a customized insurance management program for the business, where they design the policies, negotiate the terms and conditions with the companies and place the cover.
Importance of Insurance Broker
- We need an insurance broker to explain to us every detail of the policy. At times few policies are to be complicated and the broker needs to make sure you are properly protected.
- As they have a thorough understanding of the insurance market they negotiate on behalf of the client.
- A broker can prepare a customized insurance and risk management program for the client or their business, they design the policies and negotiate with the insurance company.
- If you need to claim your policy, your broker will assist you through the process and will liaise on your behalf.
Duties and responsibilities of the Insurance Broker
- As they obtain the license to make written internal bylaws and provide a copy to Insurance Agents (IA).
- Insurance brokers and their branches are independent of other parties in regard to the organisational and administrative aspects.
- They have to develop a professional code of conduct for employees and to supervise and organize their undertaking to ensure compliance with the law.
- Operational Guide must be created for risk management to update and review it as per the rules and regulations.
- To maintain coordination with the internal controller to perform the given tasks and inform the IA for any violations.
- To dismiss the internal controller by a decision of the board of directors of the Insurance Broker.
- Apart from these rules and regulations, there are still few obligations which the Insurance broker must comply towards the IA, insurance companies and customers.
Though The UAE law has provided the role of responsibilities of the insurance brokers, recently Dubai court has held the Insurance broker liable for payment of recoveries to an Insurance company from a reinsurance company.
How can an Insurance Broker help you?
Insurance brokers can help you in the following ways.
- Objective Risk Estimation
- Being impartial
- Range of insurer options
- Provides exact policy comparisons
- Savings on your premiums
- Assistance during the claim
- Saving the time
- Giving correct advice.
As there are various options, limits and coverages for every policy, it’s difficult to know which type of coverage is correct for your circumstance. It is an Insurance broker who can guide you and simplify the process of choosing Insurance coverage.
1. Objective Risk Estimation
As the insurance broker explains the risks and responsibilities involved, you can choose the type of coverage you need. With exclusive access to technology-based tools, brokers explain it in a simpler way so that you can choose your option and determine a fitting policy. To have proper insurance coverage is definitely a sigh of relief. Whether your company sued for any issue or your house on fire, etc, your broker addresses all the issues. A broad plan will be built to address all your concerns.
An Insurance Broker’s Work is to Assist You
It is the responsibility of the broker to help you when you need insurance for your vehicle, home, business or your family. They work to learn your insurance needs because they work for you, not for the insurance company. Businessmen won’t realize the exposure of risks for their companies, but it is an experience of the insurance broker to explain the risk that you are about to face.
There can be some business exposure risks that you may not be aware of and a professional insurance broker will make you aware of
- Credit risk insurance
- Employers’ liability
- Public and product liability
- Professional indemnity
- Key-man
- Business and property coverage
- Business interruption
An insurance broker implements the risk reduction planning to address all risks.
It is the insurance broker who studies your business and personal condition and examines the situations at risks and determines fair coverage levels and provides right coverage at the right price. We can see many options of insurance coverages but choosing the right insurance is a very huge task and the insurance brokers can guide you to choose the right policy and ensure that you won’t make any mistake at work and get into legal trouble.
2. Being Impartial
It’s very important to have an impartial insurance broker who can explain all the loopholes and suggest proper coverage. As you get an honest broker they work for the development of your business. Therefore working with an unbiased broker gives you multiple benefits.:
Insurance companies never try to communicate with you on any basis until it’s a renewal period. But the brokers are always with you and build a long-lasting relationship. It’s your broker who has a constant watch on the mid-term reviews and offers assistance whenever necessary.
3. Range of Insurer Options
Generally, people have an assumption that if they directly approach the insurance company it will be cheaper, but it rarely works. Approaching the insurance company through the brokers makes the work easier, gives you more options, less time consumption. By Viewing different options you will have a better idea to choose a proper plan.
Policies are sold directly by the insurance companies, but you will not have many options. As the brokers are accessed to the specialised markets they are not tied up only to one insurer, so they can find better coverage at the best price. If you have any specialised needs to be covered, the broker would act on your behalf by negotiating with the insurance company for suitable policies.
4. Provides exact Policy Comparisons
Comparing insurance policies individually is very difficult. It takes a lot of time to understand each option and decide whether it suits your needs are not. Without the broker’s assistance, it will be at higher risk by selecting the wrong coverage that can be compatible costly and it can be for a longer-term.
5. Savings on Your Premiums
Policyholders who are assisted by the brokers make less unnecessary claims and make sure to be insured for the correct amount. This automatically reduces the money for the insurance company. You can get the premiums at lower rates if you hire a broker, because the insurance providers offer lower rates to the brokers, as the broker’s assisted their customers to buy a proper policy with the correct coverage. Brokers offer more options that fit your needs in your budget.
6. Assistance during the claim
A licensed and professional broker acts as an advocate during the settlement process by promoting quick and accurate settlements of any claim. This avoids legal costs and any negative repercussions. You may not face any tension as your broker will manage if your claim goes away.
7. Saving the time
Maintaining an insurance broker gives you a smooth and easy process, as they are available on phone and online too. Businessmen hire insurance brokers to save their valuable time. Starting from the basic claim to the employee education programs all the services are handled by the brokers and save a lot of time to the owners.
Insurance brokers mainly focus on vehicle insurance, group health insurance or any other business policy and offer other services based on the field of expertise.
If you want to pay affordable premiums for insurance you need to spend a lot of time searching for better claims. But an insurance broker guides you with a suitable policy that does not exclude your necessity and gives you the best policy at an affordable premium.
A professional broker’s suggestions are based on their experience so you save time in making decisions. Make sure that your policies are updated to make sure your coverage for unnecessary official and tax issues.
Insurance Shopping Fatigue
Generally, shopping is a favorite hobby for many but shopping with insurance is not suggestable because there is a time limit as you are choosing any policy and this limited time can cause undue stress if the present coverage is about to expire you need another as soon as possible. Consequently, if you settle for satisfactory coverage that is valid enough. But often the best policy gets lost in the shopping fatigue.
8. Giving correct advice
Therefore an insurance broker is trained up to become an expert in managing insurance policies. As you explain your situation they provide balanced solutions for an individual’s risk and liability coverage. They try to ask all the details personally in regards to your business so that they can choose a better policy. They try to examine the present policies and the policies that are already covered so that there won’t be any overlaps.
By getting the right advice at the right time helps you save money on your insurance. Overall, it would be a positive experience with an insurance broker.
Conclusion
Usually, insurance brokers are not liable for the default of insurance companies or customers. Therefore IA is issuing licenses that make business safer for the clients in UAE, that can protect the national income, develop the economy, and encourage free and effective competition. This can provide the best insurance services with proper coverage at reasonable rates in the insurance market of the UAE.
About the author
Vinay Kumar Goguru is a finance professional with more than 8 years of diverse experience as a researcher, instructor and Industry work experience with both public and private entities. Prior to MyMoneySouq, he spent 6 years in Berkadia, It's a commercial mortgage banking company. He has a "Doctoral Degree in Commerce" and two master's degrees with a specialization in Finance, one as Master of Commerce and other as Master of Business Administration. He has written several articles on personal finance, published by different International journals. He loves traveling, reading and writing is his passion. He has a dream of writing a book on his favorite finance topics.
