There is a wide range of reasons why individuals and organizations need insurance. On an individual level, most of us will need some form of motor insurance after we buy our first car. With the purchase of a home comes the need to ensure that its contents and the property itself are adequately insured. In addition, a key part of securing a mortgage on a property will be to evidence the fact that you have sufficient levels of life insurance that would allow your mortgage to be paid off should the worst happen, without leaving your family in financial ruin. There are a wide range of insurance products on the market today and one way to make sense of determining which insurance products are right for you is by utilizing the services of a professional insurance broker. An insurance broker is different from an insurance company for a variety of reasons. This article attempts to explain some of the key activities and attributes that make an insurance broker.
They Act as Intermediaries
Dedicated insurance brokers are found all over the world. In Canada, you can search for insurance broker montreal to find a range of professional brokers. Regardless of where they are based, they have similar purposes. All insurance brokers act as an intermediary between you the customer and the insurance providers that offer a myriad of insurance services. The key point here is that they are not employed by any specific insurance provider. By being independent, they can search the market for insurance products from a wide range of insurance companies, to determine the package that is fully suited to your circumstances and requirements. Put simply, it is not in the broker’s interest to offer you an insurance product from a specific insurance company as they have no ties or loyalty to them. They operate in the space between customer and supplier and their biggest input is the quality of advice that they provide.
Specialist Knowledge
By acting as intermediaries and being able to search for a range of insurance products from a wide variety of providers, brokers bring an immense amount of professional industry-specific knowledge to the process. Most brokers will have a bachelor’s degree in a relevant field, such as economics, finance, or business law. However, it is not imperative to hold a degree to practice as an insurance broker. Brokers will likely need to hold an insurance broker’s license to practice. This is considered mandatory in most American states and other countries around the world. Generally, insurance brokers will have specialist knowledge in the field of business, finance, and marketing, which they will have learned to practice in their field. They will have in-depth knowledge of a range of insurance products from business insurance to travel insurance and home insurance, to name a few. In addition, they will also be expected to keep pace with changes in the industry because of new laws coming into effect. For more information on the skills and knowledge needed to become an insurance broker, see here.
They Offer Impartial Advice
As mentioned previously, insurance brokers are not tied to any specific insurance provider. This puts them in an ideal position to offer honest impartial advice without being under pressure to sell policies from the company that they work for. This is of great benefit to the consumer as it means they can be secure in the knowledge that any advice given is tailored around their specific needs and circumstances and allows them to find a product or insurance solution that fits exactly what they need. Conversely, if you go direct to an insurance provider, they will be required to sell only their insurance products so will frame them in the best and most competitive light to secure your custom.
Commission Based Remuneration
Many insurance brokers will get their remuneration from the services offered to the client by way of commission from the insurance companies themselves. When an insurance broker successfully negotiates a new insurance policy, the insurance provider then closes the deal. Written into this contract will generally be a percentage of the policy’s total annual premium that serves as the commission for the broker. As a general rule, the commission percentage on an insurance policy tends to be between 2% and 8% of the annual premium cost. In addition, the broker may also charge the client certain fees. This may not happen universally, but can typically include fees for providing specialist advice and for making claims on their policies.
Bound By Confidentiality
All insurance brokers have a requirement and a duty to ensure that all personal information gained during an assessment of the client’s insurance needs remains strictly confidential. In addition, any personal or sensitive information that is requested from your insurance broker should be strictly relevant to your insurance needs. An insurance broker can only share personal information with insurance companies for the specific purpose of gaining the insurance requested and must adhere to strict GDPR laws. Whilst insurance brokers have a legal obligation to handle your personal information securely and sensitively, there is also the obligation on the behalf of the client to supply accurate and full information that will be used to determine their policy requirements and the final premium amounts. The client must give full and honest information. Put simply, any information that is given falsely or recklessly may invalidate a policy and could lead to legal action or liabilities.
To Sum Up
Insurance brokers are highly trained insurance specialists who act as intermediaries between the client and the insurance provider itself. They tend to work on commission and may occasionally charge fees for their services or specialist knowledge. The advice they give is impartial and honest and they are not bound to sell specific companies’ insurance products. In addition, they are legally bound to keep personal information gained from the client securely and not to breach confidentiality laws. To do their job properly, the client must provide accurate information.
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