Insurance intermediaries assist in the placement and purchase of insurance, as well as provide services to insurance companies and consumers that complement an insurance transaction. Traditionally, insurance intermediaries have been categorized as either insurance agents or insurance brokers. The distinction between the two relates to the manner in which they function in the marketplace. Insurance agents are, in general, licensed to conduct business on behalf of an insurance company. Agents represent the insurance company and operate under the terms of an agency agreement with the insurer. Depending on the terms of the agency agreement, an insurance agent may be authorized to solicit insurance business, collect premiums and issue cover notes on behalf of the insurance company. Some insurance agents also do provide an after sales service in assisting their clients in the event there is a claim to be made with their insurance company. Insurance brokers are full-time professional intermediaries who act on behalf of potential policyholders. All Insurance Brokers are licensed by Bank Negara Malaysia and are registered with The Malaysian Insurance and Takaful Brokers Association (MITBA). They represent their clients who want to buy insurance coverage and provide advice on the best insurance cover to meet their clients’ insurance needs and negotiate for the best possible terms for their clients with insurance companies. As an after sales services, brokers also help their clients in presenting claims to the insurance companies and in getting their claims settled. The brokers are paid a brokerage by the insurance companies. More information about insurance brokers, please visit www.mitba.org.my. Dealing with an insurance intermediary is something that we all have to do at some point. Therefore, learning how to deal with your insurance intermediary is essential. Here are a few tips to keep in mind.
Professionals at your service Insurance intermediaries facilitate the placement and purchase of insurance, and provide services to insurance companies and consumers that complement the insurance placement process. Traditionally, insurance intermediaries have been categorized as either insurance agents or insurance brokers. The distinction between the two relates to the manner in which they function in the marketplace. As players with both broad knowledge of the insurance marketplace, including products, prices and providers, and an acute sense of the needs of insurance purchasers, intermediaries have a unique role – indeed many roles – to play in the insurance markets in particular and, more generally, in the functioning of national and international economies. Intermediary activity benefits the overall economy at both the national and international levels: The role of insurance in the overall health of the economy is well-understood. The intermediary’s role within this enterprise stems from two essential functions performed by the intermediary: reducing search costs and uncertainty. Risk managers increasingly use enterprise risk management tools to allow them to understand their risk profile, identify cost drivers and analyze enterprise-wide risk. Some intermediaries are active in providing such tools. One of the functions of some insurance intermediaries is to help clients manage their risks, improving their risk profiles and reducing the likelihood that an insured event will occur. Creating a captive insurance company is a popular risk-financing alternative, especially when insurance costs are high. Captives are also popular options for commercial enterprises that want to finance and control their risks. A captive insurer is an insurance company that is wholly owned by a non-insurance organization, typically a large company or group of companies in the same business. An intermediary may help a client to establish a captive and/or manage the captive once it is up and running. |