The Role of the Commercial Insurance Broker in Risk Management

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As Risk Management has developed as a discipline in it's own right, the insurance broking industry has recognised that additional technical services are needed by its business clients as well as more innovative solutions to insurance buying.

Brokers have responded to this need by the establishment of risk control departments specialising in health and safety issues, technical engineering skills, the establishment of management companies that can look after the captive insurance companies of their major clients, and the transition from the conventional commission- earning basis to a fee basis which reflects much more accurately the work and professional advice supplied by the broker rather than relating directly to the amount of insurance that is being sold.

The Business Insurance buyer in looking for the broker that can help him with his risk management will require one who is prepared to spend a considerable amount of time becoming familiar with the client's operations and risk exposures.

Commercial Insurance clients will also seek a broker who can help to plan a programme for handling such exposures including the buying of insurance, and who can offer advice on the cremation of risk retention levels and the implementation of loss-prevention schemes.

The Commercial Insurance Broker's general role in this context is therefore to ensure that the client's business risk exposures are properly handled, and in the financial area, this means by both by business insurance and non-insurance measures.

In addition the broker should, through his skilful negotiating, volume of profitable account and innovation, produce more effective insurance-buying programmes and, last but by no means least, help the client to reduce his business losses.

The overall objective of Business Insurance Broker's risk management services are therefore to improve the client company's financial performance by helping to reduce expenditure upon insurance and avoid potential loss situations.

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Source by Dave Healey