Duties of an insurance broker
Insurance broker is a type of insurance intermediary who acts on behalf of their clients to provide risk management advice in the interest of their clients. Insurance brokers are the only insurance intermediaries who can be held legally liable for the deficiency in Services provided to the clients.
Insurance brokers are classified into 3 types:- Direct broker who can source Life insurance, health insurance and non life insurance. Reinsurance broker who can source reinsurance business. Composite broker who can act as both direct broker as well as insurance broker. In short, composite brokers can source insurance as well as reinsurance business.
Below are the duties of an insurance broker in India:-
- Sell insurance:- The basic duty of an insurance broker is to sell the insurance policies of insurance companies. Insurance brokers can have tie-ups with multiple insurance companies to sell their insurance products to the customers in the market. Insurance brokers sell insurance products as per the needs and requirements of the customers. Insurance brokers makes sure that the insurance policies sold to customers are inline with their requirements.
- Negotiate premium:- The other important duty of an insurance broker is to negotiate the insurance premium with an insurance company on behalf of the customer. Insurance brokers are good at negotiation, be it premium or the coverage under the insurance policies.
Negotiation of premium is an important task which could be easily pulled off by an insurance broker. Insurance brokers are equipped with knowledge to carry the negotiation process smoothly and benefit the customers.
- Risk management:- Insurance brokers are certified risk management solution providers in the insurance market. In addition to selling insurance and negotiation with insurance companies, insurance brokers also provide end to end risk management solutions to their customers.
The risk portfolio of the customer would be analysed and then the risk management solutions would be provided to the customer to mitigate the risk. As a part of the risk management solutions the insurance brokers also recommend purchase of certain insurance products.
- Attracting new clients:- Insurance brokers carry out certain programs to attract new clients from the market. Attracting new clients from the market is very difficult and insurance brokers need to employee certain strategies to get the work done.
There is enough potential in the insurance market as the insurance penetration ratio in India is quite less when compared to the developed countries. This involves meeting with potential prospects and understanding their insurance and risk management requirements. There might be many leads coming to the insurance brokers but only a few of them would get converted at the end.
- Retention of existing clients:- The other most important duty of an insurance broker is to retain the existing clients. Retaining a client is as good as a new client. It would be very difficult to retain clients nowadays due to the stiff competition in the market. Any deficiency in Services would lead the client to walk away from the relationship.