Since an independent insurance broker sells policies of several different insurance companies and is not restricted to selling the policies of one insurance company only, he or she will be able to find you a policy that meets your needs most closely and charges the lowest premium.
However, there is one major problem. An independent broker is usually an expert in a limited number of insurance types. On the other hand, when you seek the services of a commercial insurance broker who works for a professional company, they can guide you about a large variety of policies and discuss many different types of coverage available. In addition, these large companies are offered special discounts by insurance companies in an attempt to attract more clients. Commercial insurance brokers working for professional companies can provide you with the following services:
- Risk and Insurance Services such as global risk management, financial solutions, risk consulting, insurance program management services for associations, businesses, public entities, professional services organizations, and private clients and insurance broking.
- Risk consulting and technology i.e. investigative, financial, security, intelligence and technology services to law firms, corporations, nonprofits, government agencies, financial institutions and individuals.
- Human resource consulting i.e. consultation in the field of HR and related financial products, advice and services. Consultation helps clients create and implement employee health care and insured group benefit programs.
- Investment management. This involves offering equity and fixed income products to individual and institutional investors that are invested globally and domestically.
These services are ideal for businesses and corporations. Professional companies ensure that their brokers are up to date and get rigorous training. These brokers have access to a huge database of insurance companies and as a result, the can find the most suitable policies for you. A commercial insurance broker will prepare reports, maintain records and in case you suffer a loss, he/she will help your company settle your insurance claims. Some brokers also offer financial analysis or advice about how to minimize risk, as mentioned above.
You obviously need the backing of a large professional organization with a lot of resources to provide such services. There is a major difference between insurance agents and brokers. Insurance agents do not get paid by the client i.e. the person who is planning on purchasing insurance. The insurance agent receives compensation from the insurance company from which the client ultimately buys a policy. The compensation is usually a commission and this is disclosed by insurance companies to state insurance regulators as part of insurance companies’ rate filings. The agents rarely receive compensation from the clients.
On the other hand, an insurance broker offers paid advice to clients and represents that client rather than an insurance company. In some instances, the broker also receives commission from the carrier for placement of a policy, he points out. This increases the chances of fraud because some insurance companies actually offer illegal kickbacks to brokers in exchange for ‘steering’ clients to buy their policies. These increased the cost of coverage for customers and made the premium go up. So if you opt to use the services of an insurance agent who represents a reliable insurance company, you will receive free advice and you won’t need to spend a penny. In addition to this, many insurance companies offer you a discount if you buy a policy directly from them rather than going through an independent broker because then they save on paying commission to the broke.