The etymology of the word broker can help understanding who brokers are. It seems to be connected with the Anglo-Normandian word brocour. It means ‘a small trader’. Brokers are indeed people who arrange transactions. They trade most of the times services. They are a third party that manages the deals between the buyer and the seller. There are many types of brokers. They are business agents, insurance brokers, some deal with investments, with real estate, and many other areas of the business world.
The insurance broker acts on behalf of the insured business or person and not on that of the insurance companies. The definition of the insurance broker states it clear that he has the obligation to search the best offer of insurance to suit the needs and the financial options of the insured person or company. Moreover he has no restriction in placing business to a certain company. They have to find the best insurance contract for their costumer.
Insurance brokers are experts in the first place. They make sure that the clients they represent are fully covered when they choose a certain type of insurance. They are also experts in risk management. Working with a professional insurance broker means never having to face issues in what concerns the coverage of your business from liabilities for example.
Insurances come in many forms. It is the broker’s duty to find the right one for you. In the case of the companies, one of the most important types of insurance is the indemnity one. The broker has to make sure that in case of financial loss, business owner can be properly compensated. Most company owners have to choose between being compensated with money, repairs, reinstatement and even replacements.
Another duty of the broker is to find the most suitable type for you from the financial point of view too. They have to provide pertinent information on the types of insurance, to find the best packages for you and to implement methods of payment.
Insurance brokerage is different in several aspects in some countries. However in most states it is a regulated business. This allows small brokerage companies to compete with the large ones. The well set rules also have an influence on the commissions of the insurance brokers. In some countries there is a clear difference between an agent and a broker. The former can act on the behalf of a certain company while the latter acts only in the benefit of the clients.