What are the Advantages and Disadvantages of using Insurance Brokers?
In recent years, the insurance market has seen a sudden rise in citizen’s interest in monetary support services. At present, customers are alert or attentive when it comes to choosing suitable insurance policies from the different insurance companies by using insurance brokers or insurance agents. You may have been well-known with terms such as insurance companies, insurance agents, etc. however;, there may be some little alertness regarding the term insurance broker. Scroll down to check the advantages and disadvantages of using insurance brokers, but we have to understand the term insurance broker before that.
Insurance Broker – An Overview
An insurance broker is an individual who sells the insurance plans on behalf of an insurance company to the customers. It also works as an intermediary between the customer buying the insurance policy and the insurance company or entity. The primary objective of a broker is to satisfy the interests of their customer. However, to become an insurance broker, it is obligatory to obtain an insurance broker license. A broker is someone who has highly qualified and has highly understanding of the insurance policy and insurance market. They provide a variety of offers from which a customer can opt for the best insurance policy for them, and the insurance broker may help them find one as per their requirements.
Importance of an Insurance Broker
Insurance may be complicated and difficult for many customers, and one may need the help of a professional who will guide the customer in finding the best insurance policy as per their requirements. Insurance brokers are those who are alongside and updated about the latest alterations and developments in the insurance market. Hence, they play an essential role in finding which insurance policy is best for a person as per their requirements.
Advantages of Using Insurance Brokers in India
Following are some significant advantages of insurance brokers:
- Saves Time: Buying an insurance policy from an insurance broker may help you save more time and effort by completing the task independently without burdening you.
- Fewer Costs: For selling insurance policies and products/items of the insurance company, an insurance broker is paid a commission by such a company. Therefore, one doesn’t require paying for their time, and in the future, there is not much that you require to deal out.
- Customized Policies: An insurance company may sell insurance policies to the customer that could be like “one size for all” type of product where the customer may not have a range to select from; however, by using an insurance broker, he or she shall make sure that the customer may get the best insurance policy as per their necessities.
- Accurate Information: When the customer confers with an insurance broker, it may take some time but remember that they shall help the customer get accurate information which you can opt for and confirm the insurance policy thereon.
- Making a claim: One of the major advantages of using an insurance broker is that your claims are taken care of. Your insurance broker can help you out in making a claim and dealing with any challenges posed thereto. If anyone buying the insurance policy directly, then one may face lots of problems as one may be required to surround the insurance company for making a claim.
- Knowledge of Insurance Brokers: The knowledge of insurance brokers may come in helpful for the customers while choosing an insurance policy. As they have worked in this sector all day hence they have a much better thought of which the policy best for the customers.
Disadvantages of Using Insurance Brokers in India
Following are some significant disadvantages of using insurance brokers:
- Additional Charges: Apart from the premium, one may require to pay some extra charges. This other charge concerns the broker fee.
- Lack of Professionalism: Occasionally, the insurance brokers may show a lack of professionalism. They may feel pretence as specialists and looks to cheat others and make money. They may even work without a valid insurance broker license or work using a fake insurance broker license. Hence, one should ask for an insurance broker license prior to using an intermediary service.
- Insurance Broker Focusing to Close the Sale: It may be hard to believe whether the insurance broker is good or not. It is because of the fact that some insurance brokers may be focusing on closing the same rather than understanding what you want.
- Limited Offers: It may be noted that all insurance brokers don’t work with every insurance company; therefore, there may be restricted offers.
- Lack of Experience: A beginner broker who may be new to this field may not be familiar with the discounts and all. It may confuse and perplexed the customer.
What is the Primary Difference between Insurance Brokers and Insurance Agents?
Following are some primary difference between Insurance Brokers and Insurance Agents:
- Insurance agents get a higher commission as compared to an insurance broker, and their income is also stable as they serve only one insurance company. The commissions for brokers are dependent on the number of sales they make.
- Agents may signify only one insurance company, and they focus on working for the betterment of an insurance company that they represent; on the other hand, an insurance broker sells insurance plans of different insurance companies as they do not have a promise to a specific company.
- The business amount for an agent may be restricted as they deal with the insurance product of only one insurance company. On the other hand, the broker deals with various insurance products in the market and has a tremendous amount of business at their ordnance.
- Before selling their insurance products to the customers, insurance agents are trained by their companies that they represent. In contrast, insurance brokers are not well-trained by any specific company because they are involved in selling many insurance products.
There are always some advantages and disadvantages of every aspect, so the insurance brokers also have some. On should always differ while using insurance brokers to opt for suitable brokers. Always choose an expert in such matters to have the best outcome.
Read our article:A Complete Guide on the Compliance of Insurance Broker under IRDAI