Insurance broker

Insurance broker

An insurance broker (agent) sources (brokes) contracts of insurance on behalf of their customers.

Insurance brokerage in the UK

The term "Insurance Broker" became a regulated term under the Insurance Brokers (Registration) Act 1977 [ [ (retrieved 19th July 2006)] ] which was designed to thwart the bogus practices of firms holding themselves as brokers but in fact acting as representative of one or more favoured insurance companies. The term now has no legal definition following the repeal of the 1977 Act. The sale of General Insurance has been regulated by the Financial Services Authority since 14 January 2005. Any person broking insurance can now call themselves an insurance broker.

Insurance brokerage is largely associated with general insurance (car, house etc.) rather than life insurance, although some brokers continued to provide investment and life insurance brokerage until the onset of more onerous Financial Services Authority regulation in 2001.

Insurance broking is carried out today by many types of organisations including traditional brokerages, Independent Financial Advisers (IFAs) and telephone or web-based firms.

Insurance brokerage in the United States

Insurance brokerage in the United States is also a regulated industry, with almost all states individually issuing brokerage licenses. Most states have reciprocity agreements whereby brokers from one state can become easily licensed in another. There are exceptions to this, most notably in the case of Hawaii, where all licensed brokers must live on the island.

Because of industry regulation, smaller brokerage firms can easily compete with larger ones, who are forbidden by law from providing their customers with rebates or other discounts on the policy prices of insurance companies. For this reason, the United States is home to many different notable insurance brokerage firms.

Brokers play a significant role in helping companies and individuals find property and casualty (liability); life and health insurance. For example, research shows that brokers play a significant role in helping small employers find health insurance, particularly in more competitive markets. Average small group commissions range from 2 percent to 8 percent of premiums. Brokers provide services beyond insurance sales, such as assisting with employee enrollment and helping to resolve benefits issues. [cite web|author=Conwell, Leslie Jackson Conwell|url=|work=Issue Brief No. 57|title=The Role of Health Insurance Brokers: Providing Small Employers with a Helping Hand|publisher=Center for Studying Health System Change|date=October 2002]

Insurance broker vs. agent in the United States

Though not an absolute separation; an agent is an insurance company's representative by way of agent-principal legal custom. The agent's primary alliance is with the insurance carrier, not the insurance buyer. A broker generally has no contractual agreements with insurance carriers and relies on common or direct methods of perfecting business transactions with insurance carriers. This can have a significant beneficial impact on insurance negotiations obtained through a broker.


ee also

*List of Acts of Parliament of the United Kingdom Parliament, 1960-1979
*Financial adviser

External links

* [ British Insurance Brokers' Association]
* [ Financial Services Authority]

Wikimedia Foundation. 2010.

Look at other dictionaries:

  • Insurance broker — Broker Bro ker (br[=o] k[ e]r), n. [OE. brocour, from a word akin to broken, bruken, to use, enjoy, possess, digest, fr. AS. br[=u]can to use, enjoy; cf. Fries. broker, F. brocanteur. See {Brook}, v. t.] 1. One who transacts business for another; …   The Collaborative International Dictionary of English

  • Insurance broker — Insurance In*sur ance, n. [From {Insure}.] [1913 Webster] 1. The act of insuring, or assuring, against loss or damage by a contingent event; a contract whereby, for a stipulated consideration, called premium, one party undertakes to indemnify or… …   The Collaborative International Dictionary of English

  • insurance broker — A company that arranges and negotiates insurance on behalf of clients. Practical Law Dictionary. Glossary of UK, US and international legal terms. 2010 …   Law dictionary

  • insurance broker — A broker, independent of any insurance company, who represents the interests of the buyer in searching for insurance coverage at the lowest cost and providing the highest benefit to the buyer. Bloomberg Financial Dictionary * * * insurance broker …   Financial and business terms

  • insurance broker — One who acts as a middleman between the insured and the insurer, and who solicits insurance from the public under no employment from any special company, but having secured an order, either places the insurance with a company selected by the… …   Ballentine's law dictionary

  • insurance broker — draudimo brokeris statusas Aprobuotas sritis draudimo tarpininkavimo veikla apibrėžtis Asmuo, vykdantis draudimo ir perdraudimo tarpininkavimo veiklą draudimo brokerių įmonėje. Draudimo brokeriu gali būti tik nepriekaištingos reputacijos fizinis… …   Lithuanian dictionary (lietuvių žodynas)

  • insurance broker — noun an agent who sells insurance • Syn: ↑insurance agent, ↑general agent, ↑underwriter • Derivationally related forms: ↑underwrite (for: ↑underwriter) • …   Useful english dictionary

  • insurance broker — in surance .broker also in surance .agent n someone who arranges and sells insurance as their job …   Dictionary of contemporary English

  • insurance broker — A person who offers advice on all insurance matters and arranges cover, on behalf of the client, with an insurer Insurance brokers act as intermediaries and their income comes from commission paid to them by insurers, usually in the form of an… …   Big dictionary of business and management

  • insurance broker — also insurance agent noun (C) someone who arranges and sells insurance as their job …   Longman dictionary of contemporary English