Nowadays, there are many insurance policies available in the market, which can confuse non-specialists in making the right insurance choice. An insurance broker gives tips and guidance to the people about the best for their requirements and helps them make the right financial decisions. An Insurance broking acts as a mediator between the general public and insurance companies. They help people to buy the most suitable insurance policy according to their financial needs. To start any insurance brokerage related activities, the company must get an insurance broker license.
Who are Insurance Brokers?
Insurance Brokers act as a mediator between the general public and the insurance company. They are the representative of their clients and come forward as per their personal profits and help their clients to buy market policies accordingly to their financial status and needs. The agent and a bank are not the representatives of the insurer. However, in the globalized market, lots of insurance brokers exist. Usually, the general public misunderstood them and enhance them as glorified insurance agent in the country. The Insurance brokers can be categorised into 3 following categories, which are as follows:-
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Position of Insurance Broking Opportunities in the Market
Insurance brokers act likewise as a bridge between the both parties, in which they help and guide one of the parties (General Public) to purchase any insurance policy according to their financial needs among the one of the best available policies in the market.
While for the insurance company, they used to provide them, a bonafide client for whom the insurance company already looking for. We can conclude the Insurance brokers as a third party who continuously looking for the joint benefits for both parties and ensures them to contract together for joint profits.
The grant for the license to insurance brokers to act as per above-said objectives, the competent department “Insurance Regulatory & Development Authority of India under the preview of Insurance Regulator Act,1999 empowered solely on discretion for the same, so as to exercise the conferred powers provided under sub-section(1) of section 42 D of Insurance Act, 1999.
In the Global Context
Global Insurance holds a wider aspect of duties among the member countries while the Insurance industry has a lesser area of duty and more matured, thus more developed.
It starts analysing with the present risks and analyze /audit, recommends the Risk Management Program and suggests to risk mitigation products in case available for the insurer or either designing the product, set rates, process and actual settlement of the claims.
Within several countries, insurance brokers have wider spread network than the insurance companies that predominantly limits themselves as an underwriter.
Online Insurance Industry
It must be noted that online insurance is miserably very low growth in India, however it immense with great potential and rapid evolution within the past two years in this field.
The rapid rise and due growth in the ecommerce sector, and adaptability of the internet using transactions in the country leading to increase urban consumer in the online insurance industry and has opened the market for insurance broking indirect, reinsurance band composite segments.
In the worldwide, the direct brokers help their clients on their insurance needs, guide them with the best insurance company’s plans, returns and negotiate prices and assist them to choose a business place. Along with the post-sales services likewise minor changes in policies, negotiate with insurers in case of claims, supports in the renewal of the policy, etc.
Share Ratio in Countries
Within the developed nations, insurance brokers hold a share ratio of 70% of the insurance industry market. While in India, brokers hold around 30% and less than 1% in the general insurance industry and life insurance industry respectively. The government of India positively overlooks and allowed 100% FDI (foreign direct investment) in insurance broking sectors to boost the insurance sector to attract more funds.
Challenges Face by the Insurance Broking in the Marketplace
- A weak distribution of networks affects widely the insurance sector. There is a need to strengthen the distribution network to support the sector.
- This sector mixed up and complicated with the issue facing largely by the customers under the complicated policies that being “mis-sold” with hassle claims. It probably happens due to a lack of smooth information within the insurance players and between customers. Agents are unable to resolve such problems which result in unwittingly added problems in the insurance zone.
- Insurance Industry requires a massive change from a seller’s market to a buyer market, with insurance broking rules to restrict or allow only that agent being capable to represent the customer.
Brief on Renewal of Insurance Brokerage License
- The license for the insurance brokerage is valid for 3 years only. Thus after the expiry of the license, a broker/brokerage firm or company cannot continue its business. So you require filing a renewal application 30 days before the validity expires.
- However, the brokerage firm cannot be able to make new clients and can assist only their existing clients. The renewal application is similar to the new application filed by the insurance brokerage company for a license. The said application must be according to the Form K of Schedule I.
- In case, the application for the renewal of a license is made before the concerned authority after the expiration date of the stipulated period, then a late fine of INR 100 must be charged. Suppose an application for the same in making with a delay, and then an amount of INR 750 needs to be paid extra.
- If you exceed the 60 days bar as well, the application will be considered after 1 year. And during this period of one year, the insurance broker will not conduct any form of business. Suppose the renewal application gets rejected, then it has to be notified in the insurance brokerage applicant.
The insurance Brokerage industry is an association of well-wishers’ of the insurance company and the general public. They act positively and serve the interested public in helping them to buy best available policies in the market. They also build a good communication channel among the insurance companies and the public in ensuring both interests. To work and act as an insurance brokerage, its mandate to possess the valid license from the granting authority. Kindly associate with the Corpbiz expert to know more about the insurance broking opportunities and critical aspects.
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