5th January 2010
Under the Insurance Brokers Registration Act of 1977 it has become regulation for firms to provide appropriate coverage without acting on the behalf of the insurance companies. This was thought to be very important because it allowed businesses to interact with firms without fear that their best interests were accounted for. However legally speaking the 1977 Act has been repealed.
Since January of 2005 coverage can be acquired as long as it regulated by the Financial Services Authority. This basically means that anyone who is selling insurance may call themselves insurance brokers collectively. A business can find firms internationally, traditionally, over the telephone, or even over the internet.
A business needs to identify what exactly they need from their firm before deciding on one. Each firm offers distinct advantages and disadvantages that may not be apparent right from the first glance. Just like any other sound business practice one must do their due diligence before placing their faith in any aspect of business.
The two basic differences are between insurance brokers and agents. However a closer look reveals that there really are not any differences between the two. An agent used to be thought of as a representative of the coverage company itself unlike the other. Looking at both now shows that they both tend to have the companies interests held higher than that of the business who is acquiring the coverage.
Scams and fraud have been prevalent for years regarding coverage. This is one of the main reasons that the difference is now negligible and agencies or firms are covered by the new regulations. Insurance brokers cannot reasonably cover individuals or businesses without being regulated and government has ruled this to be fair practice despite this ruling being in clear favour of the company offering the coverage policies.
When hired it is expected the individuals providing the coverage are experts in their field, whether personal or commercial coverage is provided. The regulations state that the interests of the business or customer should be represented and the client should be advised in what their best options should be. This is not always the case as some of the companies out there prefer to ignore such regulations and are in constant danger of being shut down.
When acquiring coverage for your business it is important to know what to expect from your insurance brokers, some of these things include:
Understanding your firm and what your business needs can allow you to acquire the correct coverage. Do not let someone tell you what is best for your business, act today and do your research.