Insurance brokers do not have contractual agreements with the insurance companies in the US. They are viewed as a marketing extension of the insurance companies. Brokers usually work with an intermediary agency who sells various companies’ insurance products.

The commissions of brokers are considered as administrative costs by the insurance companies. These costs are thus built into the premiums. When you, as an employer, are seeking insurance for your employees, decide to bypass the broker and directly buy the insurance from the company you are effectively paying for the broker’s commission without using the broker. Hence it is better for you to use the brokers.

Brokers usually have a variety of plans from a variety of companies. Considering the brokers are knowledgeable, they can guide you to choosing the most cost effective plan. They can break down the variations in the various and explain in detail what each option is and how it is applicable to you. Brokers can also offer additional services which an agent cannot. They complete the enrollment forms of all the employees and make sure that the employees receive the necessary documentation and member cards. In recent times, brokers have also started providing financial, investment and consulting services. These are like extra benefits of choosing a broker to buy your insurance product.

Brokers will always be working for you when you have to file a claim or when your claim gets denied. If you are an employer, then you do not need to worry about the hassles of an employee claim being denied. The broker will always be there to help the employee out. This is the advantage of building a long term relationship with a broker. Some brokers are constantly searching for the most cost effective plan for their customers which they will need as the insurance plan expires.

In the US, an association called insurance brokers of America serves groups and individuals, health insurance plans. This association can serve you in a number of states. Another brokerage company in the UK that is offering business insurance and individual insurance is the R K Harrison insurance brokers limited.

The benefits of insurance brokers also extend to insurance companies. They do not need to spend as much on marketing efforts when they work with brokers as the coverage increases due to the business that is being brought to the firm by the brokers. They, normally in such cases, need only a smaller sales force. They can advocate the insurance companies’ position in the market. They sometime even take up the underwriting of the policies for the insurance company. This results in time and cost cutting to some extent. They can educate the customers about the strengths of the insurance company and why it is better than the other companies in the market. There are a few downsides to brokers, but the upsides are very beneficial because of which the brokers still cater to a lot of customer needs even today.

This article was contributed by Prerna Mordani.

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