Chapter 1- The insurance broking market Flashcards
What is an Insurance Broker?
A person or company (that’s a registered adviser/arranger for insurance), they arrange the contract of cover with insurer on behalf of the client.
The correct process in relationship between each three parties.
Insured, insurer, broker
explanation: the insured goes to the broker to pass information through to the insurer. The contract is then made between the insured and insurer in witch the contract will be accepted or rejected.
The three main reasons some insurers buy their insurance products through a broker.
CONVENIENCE- to save time, to make sure all data is correct and also the brokers can offer different methods to suit the clients. eg- face to face, telephone or web based methods.
EXPERT KNOWLEDGE- for more expert products eg- commercial lines. Most clients prefer to us e a broker. the broker takes responsibility to make sure the client understands all terms and conditions and what they pass on to the insurer.
INDEPENDENT QUOTATION- they’ll be able to offer a wider range of covers and help the client obtain a more favourable for their policy.
The benefits of insurance brokers to insurers.
- Convenience
- Technical expertise
- Peace of mind
- cost benefits
The types of brokers.
- global firms
- uk only based firms
- consolidators
- niche sector businesses
- wholesale brokers
- reinsurance brokers
- online brokers
- Lloyd’s brokers
British insurance brokers association is responsible for:
- promoting members’ view on proposed legislation
- providing & encouraging training in the brooking profession
- nominating members to sit on joint committees
- encouraging links with partner members from leading insurance companies
- liaising with outside bodies, including regulators, government and ABI
Traditional broking services.
- review the client’s insurance needs
- decide on the most appropriate market for risk
- negotiate terms and conditions with the insurer
- provide advice for client
- negotiate renewals
- advise and assist clients when they have a claim
- design and operation of insurance programs
who is an independent intermediary?
One who is authorised to conduct insurance mediation offering independent advise
which statement best describes a key benefit of using an insurance broker?
A. the quote will always be the cheapest
B. there is no need for the client to understand the insurance product, as the broker can do this for them
C. all brokers offer a full claim service
D. brokers can provide technical advice for complicated insurance products
D. brokers can provide technical advice for complicated insurance products
what is the main advantage to an insurer when the brokers offer additional services?
it allows the insurer to concentrate on its core business of underwriting
