Introduction

A person who acts as an intermediary and sells, solicits, or negotiates insurance on behalf of his client for remuneration is called an insurance agent. They negotiate with multiple insured and act on behalf of their client. Customers are represented on their search and they professionally find the best policy for the respective customer accordingly.

Unlike captive agents and independent, when more than one insurance company is represented, the foremost duty of the broker is the client. As insurance companies are not represented by brokers, coverage binding of the insurer is not possible. To follow the transaction one needs to hand over the account of an insurer.

Types of Insurance Brokers

Insurance brokers are mainly divided into three types which are:

1. Reinsurance Broker.
2. Direct Broker.
3. Composite Broker.

1. Direct Brokers - An organization that gets direct details about the clients for the insurance business is known as a direct insurance broker. Apart from that, the direct insurance broker gives advice on the suitable insurance policies available. They also collect market information on the insurance business. They act on the direction provided by the client, such as helping the client to pay the premium on the insurance business and open an e-insurance account. For the time being, they are licensed by the authority to act for salary and arranges reinsurance for their client. They work between primary insurers and clients only. They can apply for an insurance broker license in any of the below mention category
(1) Direct Non-Life Insurance,(2) Direct life insurance (3) Direct Life & Non-Life Insurance, and the capital requirement for license under this category is Rs.75 lakhs.

Functions of a Direct Broker:
1. Collect each and every piece of information relating to the client's business and manage risk philosophically.
2. Provide advice to cover insurance terms.
3. Act according to the instruction of the client and deliver a written acknowledgment and reports.
4. Deliver services like risk management and insurance consultancy per regulations.
5. To occur detailed information about the client’s risk management and business philosophy.
6. To acquaint himself with the client’s business and underwrite information so that this can be explained to an insurer and others.
7. To keep the full knowledge about available insurance markets.
8. To submit the quote received from the insurer for consideration of a client.
9. To give the necessary underwriting information as needed by an insurer in evaluating the risk to decide pricing terms and conditions for cover.
10. To guide clients in paying premium timely as per Section 64VB of Insurance Act, 1938.
11. To guide in the negotiation of the claims.
12. To maintain actual records of claims.

2. Re-insurance Broker - A reinsurance broker works similarly to a direct broker. The reinsurance business is managed by a reinsurance broker. Other than that, they sell products connected to reinsurance, like international insurance. They also keep the market statistics of reinsurance markets. Negotiating on behalf of the client is another responsibility of them. For the time being, they are licensed by the authority to act for salary, arranges reinsurance for their client. They work between primary insurers and clients only. The capital need for a reinsurance broker is Rs.4 crs. The clients are only reinsurers or insurers abroad or in India.

Functions of Reinsurance Broker:
1. To familiarize himself with the business of client and risk control philosophy.
2. Keep clear records of the insurer’s business to help the insurer or others.
3. Give advice based on technical data on the reinsurance business covers as available in the reinsurance markets and international insurance.
4. Maintain records of available reinsurance markets, together with solvency ratings of individual insurers.
5. Give risk management services and consultancy for reinsurance.
6. Recommend and select a group of insurers or insurers.
7. Negotiate on the behalf of the client.
8. Help in case of commutation of reinsurance contracts placed with them.
9. Remit and collect the claims and premiums within the time as agreed upon.
10. Give advice to settle claims.
11. Giving Preliminary Loss Advice within the time.

3. Composite broker - A composite broker is one who carries out all the functions of a reinsurance broker and direct broker. This form of broker takes out the merged role of a reinsurance broker and direct broker. For the time being, they are licensed by the authority to act for salary, arranges re-insurance for their client. They work between primary insurers and clients only and arrange reinsurance between reinsurers and primary insurers only. This type of broker can apply for a license in two categories namely: (1) Composite (Both) (2)Composite (Non-Life). The capital need for a reinsurance broker is Rs.5 crs.

Functions of Composite Broker
A composite broker may carry out all or any one functions mentioned in the functions category of their insurance broker or direct broker above. If the insurer gives the composite broker work as a reinsurance broker for selling reinsurance on the same risk on which the composite broker acted as a direct broker, the composite broker should make sure that the interests of the insurer and client are not biased.

Conclusion

The insurance business is contributing a lot to the general economic growth of society by eliminating and reducing the risk of loss to property and life. It is a developing sector and holds a great future for people who are interested to develop their careers in it. So from the above discussion, we can conclude that one needs to delegate and care at the time of selection of international insurance brokers and insurers having regard to their respective security establishing and rating respective responsibilities at the time of taking their services.

Need of Legal Consultancy Firm

To ease the process of selecting an insurance broker and if someone is willing to become an insurance broker and obtain the license from the prescribed authority one should take the help of a consultancy firm, where one can get expert support and advice according to their need.