Insurance is contributing a lot to the general economic growth of society by reducing or eliminating the risk of loss of life and property. It is a developing sector and holds a bright future for people who’re interested to develop their careers in it. When we look into different types of insurance brokers, there are five major categories of insurance brokers such as Direct Brokers-Life, Direct Brokers-General, Direct Brokers-Life and General, Reinsurance Brokers, and Composite Insurance Brokers.
This article is especially for insurance brokers where you will understand different insurance broker categories, their functions, roles and responsibilities, and all in between.
Who is a Direct Insurance Broker?
In simple words, a direct broker is a type of insurance broker who has been enrolled with the Insurance Regulatory and Development Authority of India (IRDAI). Direct insurance brokers work between clients and primary insurers only. The capital requirement for a direct broker is Rs. 75 lakhs. Their main duties or functions are soliciting and organizing insurance business for their prospective clients with insurers located in the country. They normally charge a pre-defined remuneration or a service fee in response to their service offered.
Different types of direct insurance brokers are:-
- Direct life insurance
- Direct Non-Life Insurance
- Direct Life & Non-Life Insurance
The functions of a direct broker include one or more of the following.
- Gathering each and every piece of information relating to the client’s business and risk management philosophy so this can be explained to an insurer and others at ease.
- Providing advice on needed insurance cover and terms
- Maintaining knowledge of available insurance markets and claim records.
- Submitting quotation from insurer to the client for consideration
- Providing essential underwriting information required by an insurer in determining the risk to evaluate pricing terms and conditions for policy
- Acting instantly on a client’s instructions and delivering him written reports and acknowledgments
- Helping a client in the negotiation of the claims and paying premium under section 64VB of the Insurance Act, 1938. (4 of 1938)
- Delivering services like insurance consultancy and risk management as per regulations
Who is a Reinsurance Broker?
A reinsurance broker is another type of insurance broker who has been enrolled with the Insurance Regulatory and Development Authority of India (IRDAI). Reinsurance brokers work for their clients with insurers or reinsurers. The capital requirement for a direct broker is Rs. 4 cr. Their main duties or functions involves soliciting and arranging reinsurance business for prospective clients with insurers or reinsurers, with reinsurers who are located both inside and outside the country. They normally charge a pre-defined remuneration or a service fee in response to their service offered.
The functions of a reinsurance broker include one or more of the following.
- Collecting and maintaining information about the client’s business and risk retention philosophy to assist the reinsurer or others
- Providing advice based on technical data on the policies available in the international insurance and reinsurance markets
- Maintaining a database of reinsurance markets available that includes solvency ratings of individual reinsurers
- Negotiating with a reinsurer on behalf of clients
- Suggesting a reinsurer or a set of reinsurers
- Delivering consultancy and risk management services for reinsurance
- Rendering help in the negotiation, settlement of claims, and in case of commutation of reinsurance contracts
- Providing a client with written acknowledgments and various reports
- Obtaining and forwarding premiums within time as agreed upon
- Giving Preliminary Loss Advice (PLA) within the prescribed time
How to become an Insurance Broker in India? All You Need to Know!
Working as an insurance broker offers unlimited flexibility in your work schedule, boundless opportunities to create a huge difference in other person lives also.
Who is a Composite Insurance Broker?
A composite insurance broker is another type of insurance broker who has been enrolled with the Insurance Regulatory and Development Authority of India (IRDAI). Composite insurance brokers work for their clients with insurers or reinsurers. The capital requirement for a direct broker is Rs. 5 cr. Their main duties or functions involves soliciting and arranging insurance and/or reinsurance business for their prospective clients with insurers and/or reinsurers who are located both inside and outside the country. They normally charge a pre-defined remuneration or a service fee in response to their service offered.
Different types of composite insurance brokers are:-
- Composite (Non-life)
- Composite (Both)
The functions of a composite broker include one or more of the following.
- The functions of a composite broker shall carry out the functions mentioned in the above two cases
- In case if the insurer assigns the composite broker as a reinsurance broker for selling reinsurance on the same risk on which the composite broker acted as a direct broker, the composite broker can make sure that the interests of the client and insurer are not biased
Considering the functions of direct, reinsurance, and composite insurance brokers, we can conclude that, all three broker types have similar roles and responsibilities as a whole. The overall essence of these is serving the customer in the most purposeful and fashionable manner on a consistent basis.