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The importance of insurance has increased significantly in the last few years, especially when the world went through the pandemic. Insurance has helped in reducing the liabilities arising during an unfortunate event. Moreover, the insurance business has also grown, and various insurance players like insurance brokers have played a crucial role in helping customers make wise decisions when it comes to choosing an insurance policy. Insurance brokers are differentiated into different categories. In this article, we will discuss direct brokers in insurance.
Purchasing insurance policy can be a complex task hence insurance broker helps the customers to arrive at a wise decision. Insurance brokers refer to those professionals who represent customers while ensuring that they get the best insurance policy. They act as a bridge that connects the insurance companies with customers. Insurance brokers make money by obtaining commissions by selling insurance to individuals or businesses.
There are different categories of insurance brokers such as Direct Brokers, Reinsurance Brokers, and Composite Brokers.
Direct brokers are licensed by the IRDAI who, for a remuneration and/or a fee, solicit and arrange insurance business for its clients with insurers in India and/or provide claims consultancy, risk management services or such other services. A direct broker gives advisory services with regard to the policy that is appropriate for its customer.
Direct brokers act in consonance to the instructions provided by its clients. These insurance brokers must keep themselves updated with information on insurance markets, maintain insurance records and help in negotiating claims. A direct broker must have a minimum capital of 75 lakh rupees in order to register and should maintain a net worth of 50 lakhs.
The functions of a direct broker are as follows:
An application for the grant of registration to act as insurance broker can be made for any of the following, in case of direct brokers-
The following documents are required-
Validity of the registration certificate
The registration certificate granted to a direct broker will be valid for a period of 3 years from the date of issuance unless it is suspended or cancelled.
Insurance brokers’ role is crucial while determining best insurance policy as they have a thorough understanding of the insurance market and are well versed in complicated insurance policies. Direct brokers in insurance are essentially involved in providing claims consultancy, risk management services or such other services.
Read our Article:An Exhaustive Analysis of Insurance Brokers Code of Conduct