The Role of Car Insurance Brokers

The role of the car insurance broker is to act as an intermediary between the customer and the insurance company. In this role, they perform a variety of functions that they interact with both the public buying car insurance and the insurer with whom they invest the business.

When a broker covers car and motor insurance risks, their role differs from other types of insurance in that the risk variance is smaller. This is because a very large portion of the car business is ultimately set on the basis of "one risk, one insurer" - that is, Lloyd's insurer or motor insurance company.

When a member of the public goes to a motor insurance broker, they expect the broker to be fully aware of all the insurance offered and offered in ordinary car insurance and commercial motor insurance. The broker must also be aware of the differences between the insurance and prices offered by the various insurance companies and the Insurers with whom he brokers.

The role of a car insurance broker is not limited to delivering and purchasing insurance. They must be available as an intermediary with the Insurer at any time, on behalf of the customer, if there are changes to the insurance contract in the middle of the contract period or to deal with any claims.

The two main insurance areas of a car insurance broker are private car insurance and commercial vehicle insurance.

In recent years, there has been a clear trend in the large brokerage business to focus more and more on commercial motor insurance portfolio investments and less and less on the market private sector.

Many large international insurance brokers consider private motor insurance uneconomical for a fully sustainable business, and therefore specialized sub-brokers or large provincial and regional intermediaries deal with the majority of the car business in this category.

Car insurance brokers receive commissions for their brokerage duties, which are received from the insurance companies in which the business is invested. The premiums available in the motor vehicle market vary somewhat, and the recent “soft market,” where premiums and commissions are low, has also led the high street insurance broker to look for more profitable business in classes other than motor classes. Car insurance brokerage commissions can range from 7% to 20%, although in commercial vehicle contracts and the large fleet business, brokerage can be agreed on a fee basis, which is often charged for the entire portfolio of the customer in question. In the past, the UK car insurance market used a standard price or tariff approved and revised by the UK Insurance Association (ABI). This is no longer the case, but this approach still affects some insurers in some specialized car insurance areas.

In recent years, however, many large brokers have developed a so-called "direct trade account." Here, the broker introduces the sub-broker to the insurers and then lets him deal directly with them under the fronting agreement for their own marketing. However, the accounts still run through the main broker. The commission is shared between the main broker and the sub-broker, and the sub-broker usually sets a higher percentage. An important limitation that applies to a sub-broker in a fronting contract is that he must transfer the premium to the main broker within 30 days of the start of the risk.

The role of the engine broker has changed somewhat in recent years with the development of Internet-based bidding systems.

In particular, insurance comparison sites that have taken on the role of intermediary to some extent. However, these bidding systems have been used successfully by some auto insurance brokers who have adapted and adopted the technology and now offer complete online comparison offers from insurance company panels. The benefits are very fast service, although it may still be advantageous for the broker to “shop” to get the best deal for his client, especially if the protection is for an atypical driver or car.