Insurance Brokers across the globe are called Independent Intermediaries, meaning, they do not represent any specific Insurance company like Insurance Agents, but, they represent the policyholder or the customer.
In other words, Insurance Brokers are experts on the side of the customer, advising the customer while buying insurance and assisting for faster settlement during claims.
Insurance is a case of solicitation by the customer: This phrase is familiar to many of us but most do not know the real meaning of this. In Insurance, the customer needs to declare the risk for which he is seeking cover through a proposal and he/she is bound to present the proposal details in a fair manner on what he/she needs cover for.
Thus, an expert on the side of the customer (just like an advocate for his client in the court of law) will ensure proper risk profiling by understanding the risk scenario and present it in a fair and transparent manner to the Insurer while seeking insurance cover. The insurance broker also fills the gap in advising and explaining the covers, terms, conditions and exclusions of the proposed insurance cover to the customer with a comparison of premiums from various insurers.
The insurance broker also supports the customer in advising and guiding on paper work and procedures during claims. This will ensure clarity in the process and faster settlement of claims.
We can cite numerous instances and stories to showcase the importance of insurance brokers for customers. The following are a few of the instances that prove the importance of an insurance broker being on the customer’s side.
Instance 1:
There are many instances where hospitals will deny ‘cashless facility’ even though the insurance company has a tie-up with them. There are administrative reasons for these denials due to which the customers are put into great difficulty for want of cash over and above the emotional pain they undergo.
A responsible and committed insurance broker will ensure involving the TPA or the Insurance Company to coordinate with the hospital for acceptance of cashless treatment.
Instance 2:
There are many instances where businesses and industries go for insurance cover for their facilities against fire, burglary and other perils but without proper declaration of asset values and coverage terms.
While covering business property, the customer has to declare the replacement/reinstatement value of the property and specify the coverage terms as ‘replacement or reinstatement value basis’. Otherwise, the property is said to be ‘under insured’.
In many cases, the customers declare ‘book value’ or ‘gross block value’ of assets to arrive at the Sum Insured. In such cases, the cost of replacement of assets or reinstatement of buildings is likely to be higher compared to the Sum Insured. This is called under insurance and will also entail proportionate deductions in claims to the extent of undervalued declaration of assets.
Many customers have suffered and are suffering due to lack of understanding of this concept during proposing for property insurance for their businesses. They tend to look at only the lower premiums and not the coverage, terms and conditions.
A responsible broker will guide and assist the customer, including arranging for valuation of assets by a registered valuer, to represent such things properly to the insurer and ensure comprehensive coverage and avoid difficulties during claims.
Instance 3:
Our experience states at least 1 out or 10 claims in health insurance policies face rejection of claims due to certain terms and conditions of the policy that a normal customer does not understand. He sought the hospital for processing of ‘cashless’ facility where the customer need not pay the treatment charges upfront and hospital will get it directly reimbursed from the insurance company.
In a few of such cases, the hospital may deny a cashless facility advising the customer to pay the amount and get it reimbursed from the insurance company later. Due to perceived urgency, the customer also may pay the amount and complete the treatment assuming that the amount can be reimbursed as claim with the insurance company.
Subsequently, when the customer files for the claim with the insurer, they will decline to settle the claim because the ailment and treatment are excluded in the policy terms. Since, if the insurance policy was bought through an agent or a bank, there will be nobody to assist and advise the employee on whether the claim is admissible or support his instance of cashless.
Assuming that the claim is admissible, the customer may not also look out for cheaper treatment solutions available for the same ailment.
In case, if an insurance broker assisted, the customer can contact the broker before the treatment for cashless approval. The broker will advise the customer about the admissibility or non-admissibility of the ailment and treatment for claim and support on getting the cashless facility if the claim is admissible. If the claim is not admissible, the broker will explain the terms clearly for the understanding of the customer, duly prompting the customer to take course towards optimal treatment solution.
Instance 4:
Most of the customers do not know the procedure for claims, which will result in inordinate delays in settlement of claims. They usually inform the respective insurer and expect things to figure out on their own. It is an honest expectation, but there will be certain procedures like filling of forms, follow up for survey and submission of appropriate papers to get the claims settled within a reasonable period of time.
A responsible broker ensures timely guidance to the customer and follows up with the insurer and enables settlement of claims within stipulated Turn Around Time (TAT).
In large property/engineering claims, a broker reviews the loss assessments provided by the loss assessors/surveyors appointed by the Insurance Company and negotiates with them for fair settlement of the deserving claim amount.