While few companies sell insurance products directly to clients, most companies distribute the same through brokers and agents. Working as an insurance broker offers more flexibility to work as per convenience and opportunity to create a huge difference in person lives. It is the most rewarding career as it helps people to take care of children, build assets, plan for retirement, pass wealth from one generation to the next – to name a few.
What do insurance brokers do?
Insurance brokers are majorly independent. They don’t have an agreement with particular insurers. They usually represent insurance buyers and take forward the applications to insurers on behalf of their clients. In short, they are not appointed by insurers. Instead, they educate the clients about several insurance products from different insurance companies and help them choose the best among them.
But there are many people wondering, ‘Insurance Agents and Insurance Brokers – Are they same? Knowing the difference between an agents and brokers can help the insurance policy holder to use their services effectively.
So, what makes insurance brokers unique from insurance agents?
While insurance agents work with one company and sell insurance products available in their company, insurance brokers choose from a variety of insurance products and help the clients to choose a policy which is adequate enough for their needs. The best part about brokers is that they analyse the type of business that the clients’ are in and determine the most appropriate products for them unlike agents who provide options and it’s up to the clients to determine the products they need. Also, brokers typically charge payments which are higher than that charged by an agent.
How are they divided?
1. Direct Insurance Broker – A direct insurance broker solicits and procures the insurance products and helps the client to buy an appropriate policy and earns a commission from the company whose insurance policy has been sold.
2. Composite Insurance Broker – A composite insurance broker holds valid license to deliver both life and general insurance related services. This licensing process is very selective by the authority.
3. Reinsurance Broker – A reinsurance broker works for an insurance company to purchase reinsurance for it which includes negotiating rates and finding the best policies.
Who can apply for insurance broker license?
Insurance broker license and their operations are issued as per IRDA regulations (Insurance Regulatory and Development Authority). Following people can apply for insurance broker license:
- A company registered under the Companies Act, 2013 or any previous variant.
- A registered co-operative society registered as per the provisions of Co-operative Societies Act, 1912 or other similar law.
- An LLP registered under the Limited Liability Partnership Act, 2008.
- Any person recognised by the authority.
Qualification and training details:
- Must hold a bachelor’s/master’s degree or any equivalent qualification like being a fellow or an associate of the Insurance Institute of India/Insurance Institute of Risk Management/Insurance Brokers Association of India.
- Engage in any insurance consultancy or reinsurance activity for 7 years from the date before application is submitted. Otherwise, being a principal underwriter or manager in any nationalised company of India.
- Should have undergone adequate hours of theoretical and practical training recognized by the Insurance Regulatory Authority of India.
- Once training is over, get passed the exam conducted by the National Insurance Academy.
- Retain a minimum capital as per regulations provided by the authority.
After the necessary conditions are satisfied, license can be issued. It can be valid for a period of 3 years from the issued date, unless the same is suspended in accordance with the regulations. A broker may apply for license renewal within 30 days before the license gets expired.Brokers carrying brochures and loads of policy documents to meet people are not a situation anymore! Nowadays, modern insurance brokers develop their broking business as well as their operations with the leading broking software. Also, it’s said that this industry provides huge earning potential: one’s desire builds the income! So, how much do you desire?