The definition of broker traditionally refers to an individual or entity that acts on behalf of a consumer or client which is known as the principle. The broker uses their knowledge and expertise to advise the client on certain decisions usually related to purchasing and trading. The broker can either play an advisory role or can also have complete purchasing and decision making power in order to act on behalf of the client or principle.
Probably the most commonly found type of brokers are investment brokers and commodity brokers. People who need to invest their money and trade in commodities seldom have the knowledge and time to manage their investment portfolios closely so that they employ brokers such as for instance these who have a lot more insight and expertise to act on their behalf. There are however many other kinds of brokers who offer people making use of their inputs of knowledge and expertise. Other examples of brokers include business brokers, Forex brokers, property brokers, insurance brokers and many more.
The definition of insurance broker is however a really vague one. Before insurance brokers were the same as any other broker, but focusing on insurance policies. They’d act on behalf of the principal/individual who employed them in order to investigate various insurance options from various insurance companies in order to secure the most effective deals for the principle, along with help interpret certain formalities within insurance contracts. A pattern eventually developed where insurance brokers did not necessarily lookout to find the best interests of the principle and would favor certain insurance companies. Actually many insurance companies posed as brokers in order to obtain the preference of deceived and uninformed individuals. Schwere Krankheiten Versicherung Consequently, the term insurance broker has resulted in one with a much broader meaning. Today an insurance broker is essentially seen as any individual who acts as a realtor to insurance on behalf of the principle, aside from perhaps the agent is acting in the interest of the principle or in the interest of a particular insurance company.
In fact the term insurance broker is rarely used to make reference to a realtor who is hired by individuals seeking the most effective insurance offers. Today it is more accurately placed on employees of insurance companies who represent the clients of the company. Insurance brokers still represent insured individuals, but instead they are hired by the insurance company itself to deal with the claims, legalities and transactions involving the insured and the insurance company. Therefore most brokers represent only 1 insurance company and act in the interests of the insurance company which they represent. The broker essentially acts as an intermediary which communicates the interests of the insured to the insurance company, manages the procedures of coverage and ensures that the insurance contract is adhered to.
To conclude, the existence of an broker is quite required to both the insurance company and the insured individual, while they insure that neither party breaches the insurance contract and ensure that procedures are followed. The insurance broker also causes it to be easier for insured individuals to communicate their interests to the business and successfully make claims should the requirement arise.