How Does an Insurance Broker Make M...
IRDA (Insurance Brokers) Regulations, 2018, provides for the different types of Insurance Broke...
This article focuses on the different roles of an Underwriter and Broker in Insurance.
An insurance broker connects the insurance companies with the general public. An insurance broker represents customers and ensures that they get the best insurance policy that fits their needs. Insurance brokers will try to attract new customers while at the same time meeting the demands of existing customers, such as assisting policyholders with claim filing and settlement.
An insurance broker can also assist potential customers in determining their specific insurance needs and customises insurance policy as per required demand of a client. An individual must possess a valid license to perform activities of an insurance broker. Insurance Broker has to face legal consequences if found operating without an insurance broker licence.
Based on their working areas Insurance Brokers are divided into majorily five types which are:
A direct broker is an agent who gathers detailed information about the clients interested in insurance products. The Direct Brokers works on Life Insurance, General Insurance Products, and some direct brokers deals and assist both on Life and General insurance policies. The direct broker renders advice on different types of policies available and informs about the benefits of an appropriate insurance policy. The Direct Broker acts per the instructions given by the client, such as helping clients pay policy premiums and help to open e-insurance accounts.
This type of broker performs similar functions as direct broker. Re-insurance broker manages the re-insurance business and sells products related to re-insurance, such as international insurance to the parities staying aboard. A Reinsurance Broker will negotiate with the Insurance company on behalf of the client and also keep a check on the statistics on the re-insurance market
A composite broker is an institution that carries out all the functions of a direct broker and a re-insurance broker. Therefore this form of broker carries out the combined role of a direct broker and a re-insurance broker.
An Insurance underwriter is a professional that analyses the risk in insuring people and assets of individuals and corporations before finalizing the insurance contract and also helps determine the price of the insurance policies and insurance premiums of policyholders.
The insurance underwriter also analyses the insurance company’s data to evaluate the future risk associated with compensating the insured individuals.
Some of the risk analysis are based on:
Insurance underwriters usually specialize their expertise in one specific area of insurance, such as healthcare, life insurance, property, or car insurance. Depending on what area of insurance they work in, underwriters can use certain information about an individual to understand whether insurance services should be offered to the client. It is not necessary for an underwriter to meet the policy proposer as they are equipped to decide on software-based algorithms of various variables. These algorithms have been created through experience in dealings with multiple cases.
Differences between Underwriter and Broker are stated below:
The above article gives us a basic understanding of the different roles of Underwriters and Brokers in India. Both Underwriter and Broker in Insurance work on the same products of insurance companies, but their roles vary significantly as they represent and cater to the interest of two different parties, i.e. Insurer and the Insured.
Read our Article: How to get an Insurance Broker License in India?