Functions of a direct broker

The functions of a direct broker shall include any one or more of the following

  1. Obtaining detailed information of the client’s business and risk management philosophy;
  2. Familiarizing himself with the client’s business and underwriting information so that this can be explained to an insurer and others;
  3. Rendering advice on appropriate insurance cover and terms;
  4. Maintaining detailed knowledge of available insurance markets also as may be applicable;
  5. Submitting quotation received from insurer/s for consideration of a client;
  6. Providing requisite underwriting information as required by an insurer in assessing the risk to decide pricing terms and conditions for cover;
  7. Acting promptly on instructions from a client and providing him written acknowledgements and progress reports;
  8. Assisting clients in paying premium under section 64VB of Insurance Act, 1938 (4 of 1938);
    Providing services related to insurance consultancy and risk management;
  9. Assisting the negotiation of the claims; and
  10. Maintaining proper records of claims.


It would be observed that the Broker’s gamut of work includes every aspect of insurance consultancy, viz., arrangement of insurance for the client, claim negotiations, claim processing, risk inspection portfolio analysis, tailor made covers for the clients etc.

To give more illustrative pattern of insurance services (they are innumerable but major types are shown below):

Portfolio Analysis:

Study of the existing insurance cover for optimization of premium structure, at the same time not in any way sacrificing risk coverage.

To analyse the present scheme of coverage/premium profile and to suggest, if need be, improvement in totality or in parts as the case may be in covers with total emphasis on optimizing and restricting premium outgo. Negotiation of such covers and facilitating the placement of such covers with the insurance company through the broker.

Claims management

Claims analysis including processing, if necessary and negotiations with insurer. The nuances of claims, the unique nature of certain claims – all these require subtle analysis and interpretation. Since insurance contracts are a part of contract law, insurance policies are amenable to interpretations within the purview of the policies coupled with case laws, precedents and practices. An experienced hand with total expertise in claim analysis and claim management insurance law and policy terms would be able to sift the healthy and useful strands of logic and correct interpretation from the welter of facts and technical data to make a forceful argument for claim settlement.

Risk Management/ Analysis is another area where we can offer very useful services, as our team of engineers/underwriters would make a thorough analysis of the existing plant/machinery and suggest risk improvement and risk profile.

It would be observed that the function of the broker is one where the entire gamut of insurance requirement and service are taken care of by the broker. The broker is the facilitator and adviser of the insured in respect of each and every aspect connected with insurance of client.

Summing Up:

What is the distinguishing feature of the institution of Broking or what is unique about the Broker?

The broker in the insurance arena is a person/body acting as an intermediary between the insured (client / firm) and the insurance companies with a view to effecting insurance policies, sorting out all the aspects relating to the insurance needs of the client and claim negotiation management.

He is expected to act as a friend; philosopher and guide as far as insurance needs and requirements of the customer are concerned. It needs to be emphasized that the broker acts as the agent of the insured and not that of the insurer and his entire responsibility and loyalty are to the client (insured).

The broker should act as the expert-advisor and show his skill in sifting from the different options offered by the market the best of insurance solutions for the client, keeping in view foremost in his mind the need for optimization of cover, most favourable terms and rates and providing value additions to the client’s insurance programme/activities.

The broker should be an expert fully knowledgeable about the insurance market, products, the particular needs and special needs of the insured (in relation to the insured’s activities/manufacturing process and similar requirements.)

The induction of the insurance broker into the Indian insurance scenario is a major act in the process of integrating Indian insurance market practices with outside world market practices to give the customer better options, better service and greater customer satisfaction. With this purpose in view, the insurance broking was given statutory recognition through Insurance Act 1938 (amendment IRDA Act 1999 and Insurance Amendment Act 2001). In accordance with the authority vested in Insurance Regulatory & Development Authority, the Regulator supervising and controlling each and every aspect of activity related to insurance companies, brokers, agents, surveyors and allied activities – the authority has formulated Brokers Regulations 2002.

The Broking institution is the only statutorily recognized form of intermediary system in India apart from the insurance agency. While an agent represents the insurer and acts as a link between insurers and the insured, an agent is not capable of rendering such special services requiring high insurance knowledge and practical experience as a broker is expected to render.

Dr. E.R. Hardy Ivamy, the most well known authority on insurance law defines an insurance broker as “A person acting as an intermediary between insured and the insurer with a view to the effecting of an insurance policy rendering service related to all the various aspects leading to the evolution of such insurance contracts. ‘THE BROKER IS THE AGENT OF THE INSURED AND NOT OF THE INSURERS’. The drastic difference between the agent and the broker is exemplified in this aspect that the broker apart from his specialized services to the client represents the interests of the client fully as insured’s agents. Till the coming into being of the Broker Regulations, there was no institution statutorily recognized as representing the interests of the client.

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