What are the duties of the INSURANCE BROKER in practicing the insurance business?

Insurance brokers act as intermediaries who bring together the insurance companies and the potential clients to the insurance policies. Insurance brokers are responsible for identifying and organizing suitable insurance covers for commercial organizations and private clients. Insurance brokers liaise between clients and insurance companies finding the client the best deal for insurance cover.

The following are the main duties of the insurance broker in practicing the insurance business.
Duty to operate binding authorities. Acting as an agent for both the insurer and the insured, insurance brokers are given the authority to perform some of the duties that are performed by the insurer such as underwriting operations, issuing insurance covers, assisting or completing proposal forms on behalf of the insured, and assisting the insured when filing for claims settlement. 

Duty to understand the nature of the insured’s business. This refers to the contractual professional duty that the insurance broker has for being an agent to the insurer. The insurance broker should analyze the nature of the business of the clients and the risk exposures that they have and then pass forward that information to the insurance company that is to cover such risks. The information obtained through this duty of understanding the insured’s business is important to the insurers during the underwriting process as it helps them determine whether to accept or reject the proposed risk.

Duty to have good market knowledge and understanding of their legal responsibilities as middlemen with regards to the insurance industry. The insurance brokers have the duty to be full of knowledge about the insurance business nature and the needs of the customers. Insurance brokers are responsible for identifying and organizing suitable insurance covers for commercial organizations and private clients. They liaise between clients and insurance companies finding the client the best deal for insurance cover.

Duty to offer professional advice to the clients on the best insurance package according to the client’s risk exposure and their anticipated risks in their line of business. An insurance broker will advise the client on the most suited insurance company to underwrite the client’s risk in terms of underwriting capacity and appetite for that kind of risk. The insurance broker has a wide knowledge of Insurance products/industry and will select for you the most ideal Insurance policy/package and the insurance company to underwrite the policy/cover. Because insurance brokers are working for clients, they will make sure they keep clients’ interests first and make sure that they understand all the terms of the insurance contract they are about to pay for.

Duty to assist the insured when filing for a claim settlement. An Insurance Broker has a professional duty to guide the insured client through the insurance claims requirements and procedures to ensure their loss/damage/injury/ and or death claims are not only promptly paid but paid to their satisfaction. Insurance brokers can also file the claim for the client if need be. They will guide the client of all the necessary documentation needed, the provisions they are entitled to as per the contract as well as contract terms that may limit some of the clients’ claim payable.

Duty to offer consultation with regards to risk management issues. An insurance broker has the duty of helping clients assess the different types of risks they encounter. They also help clients understand risks and the best ways to manage them. Brokers may also suggest alternative risk mitigation mechanisms such as the formation of a captive in a company or placement with risk retention, or even a risk purchasing group. It’s the responsibility of the broker to make sure all policy requirements are met, including medical examinations and filling out the necessary paperwork.

Other duties of the insurance broker include: to obey the principal’s instructions (obedience); to exercise proper care and skill; to perform duties personally, and to act in good faith towards the principal. It is also very important for you to note that Insurance brokers do not charge their clients for services provided, because they earn brokerage commission incomes from insurance companies in accordance with Insurance Act. Insurance brokers are also responsible for record-keeping of the clients’ key information that will prove indispensable during the claim process.