Who pays the broker in insurance?
Insurance companies would pay for the insurance broker for their services provided which includes sales and service of the company’s insurance products and claim assistance and other activities to the clients. Insurance broker is a type of insurance intermediary who is licensed by the Insurance regulatory and development authority of India IRDAI to carry out insurance broking business in India and source insurance business for insurance companies. Insurance brokers would be paid commission as prescribed by the IRDA and the commission varies from one insurance product to another. The commission slabs are fixed by the regulator and would be the same for every insurance company for the same product.
The brokerage paid by the insurance company is in the form of commission as a percentage of the premium paid by the customers. The higher the premium paid the higher would be the commission earned by the insurance broker visit here. Insurance brokers would deal with a variety of insurance products such as Engineering insurance, Liability insurance, Workmen’s compensation insurance, Group health insurance, Aviation insurance, Marine insurance, Life insurance etc. Insurance brokers are the only type of insurance intermediaries who can provide risk management solutions in addition to the sales of insurance products. Insurance brokers provide risk management solutions depending on the risk profile of the customer. The risk management solutions are customized and would vary from one customer to another.
There are three types of insurance brokers in the market namely Direct, Reinsurance and Composite. Direct insurance broker is the one who deals with life insurance, non-life insurance and health insurance business, reinsurance brokers deal only with the reinsurance business whereas composite brokers deal with both insurance and reinsurance business in India. The capital requirements are different for different types of insurance brokers. Insurance brokers are not paid by their customers as customers are already paying the insurance premium, a part of which would be given to the insurance broker to provide services such as claim settlement service, additions or deletions and other after sales service.
Insurance brokers are the only insurance intermediaries who are legally liable for the deficiency of services provided to their customers. If the insurance broker has provided wrong advice to a client the client can legally make the insurance broker in addition to the insurance company a part of the suit. This makes it better to work with the insurance brokers as they would be suggesting the insurance products that are suitable and are required by the customers instead of going for the products that generate high commission for them. Insurance brokers have high expertise in the insurance products as they deal with multiple insurance companies. Insurance brokers are allowed to tie up with any number of insurance companies to provide the best quotes to the customers. Insurance brokers can get you the best quote as per your needs and requirements as they know the products of almost all the insurance companies. Insurance brokers also offer value add-on services in addition to the other services.