An insurance broker sells, solicits, or negotiates insurance for compensation.
By 2015, the world's largest insurance broker, based on revenue, is Marsh & McLennan, Aon Corporation, Arthur J. Gallagher & amp; Co, and Willis Group
Video Insurance broker
In the United Kingdom
Insurance broker is a term that is regulated under the Insurance Brokers Act (Registration) 1977 designed to hinder the false practices of companies holding themselves as brokers but actually acting as representatives of one or more insurance companies liked. This term now has no legal definition after the revocation of the 1977 Act. General insurance sales are regulated by the Financial Services Authority from 14 January 2005 to 31 March 2013 and by the Financial Conduct Authority from 1 April 2013. Any person or company authorized by the Authority can now refer to themselves as insurance brokers.
Insurance brokers are mostly associated with general insurance (cars, houses etc..) Instead of life insurance, although some brokers continue to provide investment and life insurance intermediaries until the emergence of more burdensome regulations in 2001. This encourages a more transparent regime based on forward negotiations costs for the provision of advice and/or services. It sees the separation of intermediaries into two groups: general insurance broker/broker and independent financial adviser (IFA) for life, investment, and pensions.
Insurance negotiations are commonly conducted today by many types of official organizations including traditional street brokers and phone companies or web-based.
Maps Insurance broker
In the United States
In the United States, insurance brokers are regulated by each US state. Most countries require anyone who sells, asks for, or negotiates insurance in that state to obtain an insurance broker license, with limited limited exemptions. This includes business entities, officers or directors of business entities ("sublicenses" that the business entities operate), and individual employees. To get a broker license, one usually has to take a pre-licensed course and pass the exam. An insurance broker must also submit an application (with a registration fee) to the state insurance regulator in the state where the applicant wants to do business, which will determine if the insurance broker has met all state requirements and will usually conduct a checking background to determine if the applicant is considered trustworthy and competent. Criminal convictions, for example, may result in the state determining that the applicant is unreliable or incompetent. Some states also require applicants to send fingerprints.
After being licensed, insurance brokers should generally take continuing education courses when their license reaches the renewal date. For example, the state of California requires a license renewal every 2 years, which is accomplished by completing an advanced education course. Most countries have reciprocal agreements where brokers from one country can be easily licensed in another. As a result of the federal Gramm-Leach-Bliley Act, most states have adopted uniform licensing laws, with 47 countries considered to be reciprocal by the National Association of Insurance Associations. A country may revoke, suspend, or refuse to renew an insurance broker's license if at any time the country determines (usually after notice and trial) that the broker has engaged in any activity that makes it unreliable or incompetent.
Due to industry regulations, smaller brokerage companies can easily compete with larger companies, and in most states, all insurance brokers are generally prohibited by law from giving rebates or inducements to their customers.
Insurance brokers play an important role in helping companies and individuals acquire property and accident insurance (liabilities), life insurance and annuities, as well as accident and health insurance. For example, research shows that brokers play an important role in helping small businesses find health insurance, especially in more competitive markets. Small group commissions on average range from two to eight percent of the premium. Brokers provide services outside the procurement of insurance, such as providing risk assessment, insurance consulting services, insurance-related regulations and legislative updates, claims support services, assisting employee registration, and helping resolve benefit issues. However, some countries consider the provision of services not related to insurance obtained through brokers to become unauthorized rebates or inducements.
Negligence of insurance brokers can adversely affect clients when they find that their insurance coverage is worthless, which in turn illustrates why maintaining a competent insurance broker is essential. In one case, Near North Entertainment Insurance Services provides alternative rock band Third Eye Blind with a commercial, commercial insurance policy (CGL) that excludes coverage for "entertainment businesses." After the insurance coverage for the lawsuit was rejected because Third Eye Blind was in and, in any case, in the entertainment business, the California Court of Appeal decided in the published opinion that the broker was obliged to advise the band on more than one basic CGL policy.
spitzer investigation
In 2004, Eliot Spitzer discovered real cases of suppliers' suppression by large brokers, in which the brokers arranged with insurance companies to provide "fake" quotes in exchange for providing a lucrative risk amidst contingent commission arrangements. In 2008, AIG paid $ 125 million to complete with 9 states.
Commission and fees
In most countries there is no requirement to disclose broker commissions to customers, but in New York, regulations ("Rule 194") are adopted in 2011 which requires disclosure. Brokers or agents may decide to disclose a commission upon request.
In most states, agents can not charge other than their commissions, although Texas is one of the exceptions.
Broker vs. agent
Though not an absolute separation; an insurance agent is an insurance company representative by legal custom principal. The agency's main alliance is with insurance carriers, not insurance buyers. Instead, the insurance broker represents the insured, generally has no contractual agreement with the insurance operator, and relies on a general or direct method to fine-tune business transactions with the insurance operator. This can have a significant beneficial impact on insurance negotiations obtained through brokers (vs. obtained from agents).
Any person who acts as an insurance agent or broker must have a license to do so by the state or jurisdiction that the person is operating. Whereas previous countries will issue separate licenses to agents and brokers, most states currently issue a single producer license regardless whether the person is acting on behalf of the insured or the insurance company. The term insurance manufacturer is used for reference both insurance agents and brokers.
In Australia
In Australia, all insurance brokers are required under the 2001 Financial Services Reform Act to obtain a license from the federal government's Investment and Investment Commission (ASIC). A reputable and experienced insurance broker in Australia will generally also have additional qualifications such as a certificate or diploma in financial services that require completion of in-depth study in a particular field, the most common being general insurance or an insurance broker.
In Australia there are also a number of industry bodies that issue professional accreditation to members who adhere to the best professional and integrity standards and retain the latest skills and knowledge. The two main accreditations are ANZIIF CIP (certified insurance professional) and NIBA QPIB qualification (qualified practice of insurance broker).
Dealing with an insurance broker as a direct opponent with an insurance company is something that many customers (especially businesses) choose to do in Australia for reasons including: ease of having "shopping done for them"; have an opportunity for premium funding that allows a larger insurance policy to be paid in installments rather than all at once; dealing with one broker for all policies of car insurance for professional compensation insurance rather than dealing directly with several insurance companies; and, the ease of having a claim that is managed by a broker that deals directly with the insurance company on behalf of the client.
Disintermediation
As in many industries, there is a disintermediation trend in which consumers buy directly from insurance companies without intermediaries.
See also
- Financial advisor
- A loss control consultant
- List of Parliamentary Acts of the British Parliament, 1960-1979
References
Source of the article : Wikipedia
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