From the course: Protecting Profitability by Reducing Financial Risk
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The broker selection process
From the course: Protecting Profitability by Reducing Financial Risk
The broker selection process
- There is a misconception of the impact that the insurance broker has on the financing of risk. Insurance can be erroneously viewed as a transactional process. The key to having excellent insurance at the most competitive premium is the broker. The process of selecting the broker is paramount to protecting organizational assets and profitability. Let's first define the terms agent and broker. Agents sell insurance. Brokers buy it. An agent contractually represents an insurance company. There are direct riders like Farmers, Allstate, and State Farm that only sell insurance for that company. Independent agents can access more companies, yet contractually, they sell for the insurance companies and have what's called an agency agreement to represent them. Brokers can access insurance companies on the client's behalf. They are normally paid differently because they don't have that contractual relationship with the company, and they may charge a separate broker fee as part of the agreement…
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