Insurance Brokers An insurance broker acts as an intermediary between the client and the insurance company. In this role, the broker serves as an advocate for the client in contracting with a particular professional liability insurance company. A broker may maintain relationships with a variety of insurance companies but is not employed by any of them. In dealing with insurance companies, the broker keeps the client's interests top of mind, making the process as streamlined as possible for the client.
The broker advocates on behalf of the client to help them achieve the appropriate coverage for their needs and within their budget. Some brokers assist clients with filing claims as well. In the wake of the recession, many insurance companies were forced to cut back on their staff levels, and claims and risk management were some of the hardest hit. Rather than employing more staffers, many insurance companies turned to TPAs to help expedite their claims processing efforts.
TPAs usually have expertise in one or more areas, like professional liability insurance, enabling them to process claims in an efficient and expedient manner, freeing up the insurance company to focus its efforts in other areas, rather than on claims. The MGA is granted underwriting power by an insurance company, whereas regular brokers do not have this privilege.
Thus, an MGA has more power than a broker and can even assign new agents or brokers in retail insurance offices. MGAs typically specialize in particular areas of insurance, like professional liability insurance. This takes the pressure off the insurance company to need to have on staff an expert in each type of insurance they offer or to have to spend time and money to train someone new.
Instead, they contract with an MGA to handle more obscure areas of insurance. Benefits of These Roles Some companies are able to act in all of these roles in different scenarios. For your insurance business, it can be a great help to employ these services. Insurance is a somewhat complex topic with a lot of nuance and detail, so it helps to have people who understand these nuances and specialize in certain areas. Rather than having to learn every little detail yourself, you can free yourself up to focus on other areas of running your business, leaving it to the experts to handle more detailed tasks.
It is important to understand exactly what each of these entities offers before getting into a contract with one or all of them. Ask plenty of questions to get a better understanding of what they can and cannot offer you and your business.
Make sure that you fully understand what the scope and limits of their responsibilities will be, as this can vary from case to case. It is important to do ample research in advance to ensure that you have the full picture.
This will better enable you to make an educated decision about what is right for your business and your needs. As an insurance agent, you spend much of your work day putting together insurance plans for your clients to make sure that they have the proper coverage to protect them in the event of any incidents. However, you need to ensure that you have ample coverage for yourself as well to protect you and your company from any errors and omissions claims, which can result in debilitating costs for your company if not covered under your regular insurance policy.
In addition to having this additional coverage, there are a number of practices you should employ to help minimize the risk of incurring such claims in the first place: Follow Correct Procedures First of all, make sure that you fully understand the intricate details of all of the insurance options your company offers and the extents and limitations of each policy. You need to know exactly what you are providing to your clients so that you can make the best possible recommendations for their individual needs.
Be sure to follow all applicable regulations, and always employ ethical business practices. If you are unsure whether a particular action is ethical, it is usually best to err on the side of caution until you can be completely sure.
When completing application forms for your clients, always make sure that each question is answered fully and accurately to prevent future complications due to misrepresented information. Communicate with Your Clients Throughout the entire process of developing an insurance coverage plan for a client, take the time to explain everything to the client in detail.
You want to ensure that your client fully understands the products that they are getting and the scope of coverage. If a client chooses to decline a particular aspect of coverage, impress upon them the potential risks of not obtaining that coverage and what it could mean for them in the future. In the event that you must switch your client over to a different insurance carrier for a particular policy, be sure to alert him or her to any changes in levels of coverage, deductibles, or other pertinent information.
Document Everything As you work with your clients, both during the application process and in subsequent conversations regarding policy changes or claims, keep a record of everything that was discussed and the results of those conversations. Any time a client elects to make a change to a policy or remove certain coverage options, get it in writing with the client's signature.
While it is unlikely that you will ever need most of this documentation in the future, it is best to keep track of everything just in case there is ever an issue. However, it is important to remember that we are all human, and even with the most careful application of these practices, mistakes can still happen.
The faster you take action, the better your insurance company will be able to help you weather the storm. As an insurance professional, you understand the critical importance of comprehensive coverage.
Professional liability insurance is a critical element to every agent's ongoing practice. Without a solid liability plan in place, you risk significant damages in the event of a negligence claim or civil lawsuit award from a client.
Accordingly, it is critically important to understand all the aspects of professional liability insurance for insurance agents — and get yourself sufficiently covered. The Nuts-and-Bolts of Professional Liability At its heart, professional liability insurance is a service for the protection of agents and brokers.
This protection helps keep you from being responsible for all costs and damages from defending yourself from a negligence claim or bearing all the costs of a civil lawsuit award.
This type of coverage primarily protects you when it comes to allegations or lawsuits about your failure to perform a duty or service for policyholders working through you.
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