22 Apr 2015

The role of the insurance broker

Every entrepreneur who strives daily for the survival and development of the business enterprise is concerned of, should be relieved from the burden of uncertainty which may be caused by a badly constructed or rough drafted insurance program. The assignment of actual customer insurance needs by an insurance broker, exempts the entrepreneur from any extra weight, by giving him the ability to be ensured from damages, which under other circumstances wouldn’t have been insured and thus, those particular damages will not constitute a brake on future steps and growth of the business unit.

The Insurance Broker is the highest tier of mediation in insurance matters and operates under the supervision of the Ministry of Development, which in turn provides the authorization for practice as a profession. Formerly, an insurance salesman could become anyone and very often that was the case of someone of our nearby environment (a relative, a friend, a companion, etc.).

However, in most instances their knowledge and their services were limited to the sale of a contract and the corresponding premium collection, as the occupation of the insurer might be a secondary occupation. In the case, there was damage, the insured was at the mercy of a contract, as the specific terms and exceptions, were unfamiliar to the insured, but unfortunately very often and its own insurer. Thereby, the reliability of insurance was downgraded and consequently its necessity, since everyone knew that if damage was to take place, the compensation could be doubtful and uncertain. Thus, the insurance market was limited to the purchase of absolutely necessary contracts, such as third party civil liability concerning car coverage and even with the lowest possible premium.

The existence of Insurance Broker then comes to bridge the gap that is created because of the asymmetry in the provision of information (information asymmetries) between the insured and the insurance market. Further, as the patient appeals to a certified doctor for prescription of the necessary medication and not by going directly to the pharmacy, so is relevant the case, when the insured must apply to buy the appropriate insurance policy  to correspond with his/her actual needs. An Insurance Broker is a company composed of technically well-trained people, with relevant experience and deep knowledge of the insurance market, therefore, holds the ability to achieve the best possible price without discount on insurance coverage.

Every business is exposed to risks. The role of the Insurance Broker is to recognize these dangers and to try to neutralize and extinguish them through most proper insurance. The concept of proper insurance is very important as the worst thing to happen is to pay insurance premiums that do not meet the really existing needs. Each insurance package that circulates in the market is not always a panacea for the needs of a business and this is because every single business is unique and thus its insurance needs are specific. The Insurance Broker in contrast to the insurer is not bound to any particular insurance company, but instead has the freedom to choose the insurance company, after investigating, that meets the needs of his/her customer. The Insurance Broker knows also the market values as well as the terms and conditions of any insurance policy. In that way, enlarges the small print of contracts in the eyes of the policyholder, who is unaware and ignorant of their existence or because the customer does not have the time or knowledge of this particular field.

The Insurance Broker represents only the client and not the insurance company. The Insurance Broker is obliged to recognize and maintain professional indemnity insurance for errors and omissions (errors and omissions) that can cause damage to clients.

In the event of damage occurrence, the Insurance Broker should advise the insured for the coverage of the damage, as well as for the gathering of all necessary data and information which will lead to a quick and fair compensation.

Each entrepreneur who laboriously and with great effort has built a business wants obviously to know exactly and in detail in a case of damage that his/her property is fully assured. It is, therefore, necessary to know in what dangers is exposed and who is going to cover them and in what extend.  Nothing can be left at the mercy of an accidental insurance cover, which in turn may even threaten the future of a company or the payment  of a dubious insurance policy.

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Which of the following do you consider the most important to insure?

  • Your own protection
  • Your future pension
  • Your health
  • Your property