Important Considerations When Choosing An Insurance Broker

An insurance broker is an intermediary who arranges insurance or carries out other work preparatory

to the

conclusion of contracts of Insurance on behalf of another and also assists in the administration of such contracts and with processing of claim.
When deciding on which broker to entrust your insurances, the following should serve as guide only because the process of entering into a business relationship can sometimes be complex. As a general rule an insurance broker

Must be authorised to operate as an Insurance broker. In the UK these intermediaries must be authorised by the Financial Conduct Authority. It may be necessary to look up the broker’s credentials on the website of the regulator though brokers are required to display a copy of his registration certificate conspicuously in their office.         

Must be genuinely interested in understanding your business , its risks and insurance needs. This should be an ongoing process as these needs change. A good indication of the broker’s interest is where the broker carries out a thorough initial research of your situation or business and in the process gathers detailed information that helps it understand your needs.
© InsuranceInBoldPrints
Must be knowledgeable not just about the classes of insurance that you seek but about the insurance market as a whole. Equally important is the broker’s knowledge of your situation. As an individual, the broker should be conversant with the nature of your work, lifestyle and interest and where the broking firm is seeking to act for your company, it is vital that the broker has at his fingertips real-time information about the industry in which you operate.

Must be willing to act on your instruction . Though as the client, you should rely on the expertise of the insurance broker, crucial decisions like the insurer to place a risk with should be down to you after reviewing information/analysis presented by the broker.
This should be the case also when it comes to claims negotiation. For instance where the quantum of the claim settlement offered by the insurance company is disputed, the final decision should always be left to you (the policyholder) after careful review of the report from the broker on the claim process.

Must always act in professional manner . In most countries the industry regulator stipulates minimum years of cognate experience and/or qualification for persons wishing to hold designated position in a firm of insurance brokers. This ensures to some extent that only reputable persons with proven ability get the nod to operate as insurance brokers.
Your broker should prepare a Service Level Agreement (SLA) which outlines the extent and nature of the service expected of the broker. In addition, whether an individual or you run a company, your appointed broker must treat as confidential any information which becomes available to him in the course of carrying out his mediation role. Such information should not be used for the brokers benefit or for the benefit of a third party. 
© InsuranceInBoldPrints
Must be willing to assist in the negotiation of claims . The service level agreements mentioned above would clarify whether the broker will also handle insurance claims that predate its appointments while also making clear what would happen with reported claims in the event that the broker’s appointment is terminated.

Must disclose any potential conflict of interest. An insurance broker must act in your best interest and should disclose to you fully any circumstances that may give rise to the possibility of a conflict and ways to resolving same agreed.

Should regularly explain to you, the law as it relates to the risks you face and how the law impacts on your insurance programme.
In addition to keeping abreast with developments in your business, the broker must also track changes in law and industry trends that would impact on your business.

It is important that the broker you appoint ticks all the boxes so he can properly carry out his role and where you have any doubts, do not hesitate to ring another professional.