1. What is the difference between an Insurance Broker and an Insurance Agent?

There is a key difference between the two:

An Agent acts on behalf of one insurer only and can only sell what that particular insurer has to offer. In contrast, an Insurance Broker acts on behalf of its client. An Insurance Broker is not tied to any particular insurer and can arrange the best insurance protection for you, that too at a competitive price, with any insurer.

2. In case a client is entitled to a Special Discount, which is indicated on the face of the policy, how are Insurance Brokers paid for their services?

In the above scenario, the Insurance Company does not give any brokerage to the Insurance Broker as it has already given a discount to the client directly by way of reduction in premium as permitted under regulations.However, for the services rendered to the client, the Insurance Broker may charge some Consultancy Fee. In most of these cases, the benefits derived by the client and the quantum of discount obtained from the Insurance Company far exceed the Consultancy Fee paid by the client to the Insurance Broker.

3. Why should a client approach an Insurance Broker?

Without a broker, a client has to ultimately rely on his/her own expertise and knowledge of insurance and the insurance market. By contrast, an Insurance Broker has got a plethora of professional knowledge. The Client is entitled to look to the Insurance Broker for expertise and innovation in respect of identifying insurable risks and for placing those risks effectively. While the size of a client’s business may well give them some buying power, it cannot match the leverage that an Insurance Broker has from placing the business of a group of clients.

Thus one can think of utilizing a broker in much the same way, as one would go to an accountant, a doctor or a lawyer for a specialist’s advice.

"Insurance is the subject matter of solicitation"