Individual and business insurance buyers often need expert advice to enable them to assess the risks they have, to help them minimise those risks in a practical way, and to match their needs to the best seller of insurance in the market.
Many people and businesses choose to buy insurance directly, but others – and in particular commercial buyers – use an intermediary.
- Insurance brokers – a person or firm that provides independent advice to meet specific customer needs, choosing from a range of providers.
- Insurance agents – act as authorised representatives of a specific insurance company.
With the increasing complexity of risk facing businesses and individuals, the role of the broker has evolved during the past 20 years from pure intermediation to providing additional services for clients and insurance companies. Many brokers offer risk management services, helping companies to develop new ways to mitigate risks, for example, by adding security measures like fencing, surveillance cameras or lighting to commercial premises with a view to reducing the likelihood of break-ins.
Brokers today use their market knowledge to structure complex risk solutions for clients, primarily in the key broker markets of non-life commercial insurance and reinsurance. These solutions may be limited to cover in the UK but in an increasingly globalised economy the role of brokers is taking on an increasingly international dimension, with brokers handling multinational risks and working with providers in more than one country.
A prime example of an insurance broker would be Aon.
Brokers can work independently to arrange deals between clients and insurers. They advise clients on the most appropriate policies for them.
Personal insurance brokers generally deal directly with individual clients or companies and arrange policies for home, motor, travel or pet insurance, while commercial insurance brokers deal with more high-value insurance for areas such as the marine, aviation, energy and finance sectors.
Numerically-related or business degrees can be an advantage, but aren’t a requirement for entry to the profession. Training programmes vary considerably, with larger broking firms offering more opportunities for structured training programmes. These typically involve job rotations for experience of different areas of work, over a period of 18 months to two years.
There has been a growing emphasis in recent years on graduate-level recruitment and the development of graduate training programmes that include CII professional qualifications. This provides a structured framework leading to Chartered Insurance Broker status. Many employers grant study time and provide help with tuition fees and the cost of learning materials.