Broker and Agent Responsibilities
Many people have the feeling that insurance is like giving money away." Of course this is not really the case because insurance companies are assuming risk on your behalf so they are, in fact, giving you something in return for your insurance premiums. Nevertheless, it can be extremely frustrating and infuriating when you do have a claim and insurance companies attempt to deny or limit your coverage." It usually is never a simple matter when filing a claim." The insurance companies have their team of lawyers, experts and investigators securing their investments against all claims, fraudulent or not." In some sense, their job is to pay out as little as possible to settle a given claim.
There are many different types of insurance and various ways to obtain policies." Is there a difference between an insurance agent and an insurance broker?" There definitely is and sometimes we may not be aware of this fact or realize how it affects us." Their responsibilities are similar but there are a few key differences between their services that both come with advantages and disadvantages.
A registered insurance broker in Ontario is the "middle man" between prospective/existing clients and insurance companies and is governed by the Registered Insurance Broker Act." An insurance broker uses their expertise in the insurance field and their administrative skills (efficiently and timely processing of paperwork, premiums, etc) to formulate and create tailored plans for their clients." They are legally bound to be practical and non-biased in their duties to ensure adequate and appropriate information and advice is given to the insured." Upon renewal, policies should be re-evaluated as clients' circumstances may change and advice on suitable coverage must be reassessed.
A few advantages of working with an independent insurance broker:
- These brokers can work with a number of different carriers and don't place their loyalty with a single insurance company
- Because they are able to work freely with any carrier, they stand a better chance of getting you competitive prices
- Brokers also are required to have a license which gives them an educational advantage over their counterpart agents
- Although not limited to," brokers tend to work with two to three carriers
- Insurance is a vast empire with many products and services." The sheer amount of information can overwhelm brokers and lead to instances where they may not fully understand the range and impact of their products
- Independent brokers may not have access to technical specialized support
- A more centralized knowledge of the company's products
- In many cases, agents have access to strong back office support
- Agents can build and have a solid relationship with underwriters (the individuals who asses the compatibility and requirements for prospective and existing clients)
- A higher premium may be paid based on the fact that their portfolio is limited
- Quotas and commissions may be the driving factors behind their recommendations versus the best deal for the client.
Share
Subscribe to our Newsletter