1. What is an insurance broker?

An insurance broker is an independent insurance adviser to you on all of your insurance requirements for the assets, income and liabilities for which you are exposed. The insurance broker represents your interest throughout the entire process starting from the insurance analysis, right through the negotiations and placement of your coverage with the insurer. Just as how everyone has their own legal advisor- your attorney; their own medical advisor-your doctor; financial advisor- your banker; everyone needs a professional insurance advisor in the form of your insurance broker.

2. What features or characteristics should I examine when choosing a competent insurance broker?

A competent insurance broker is usually managed by a professional Chief Executive Officer who strives to employ a full complement of qualified and efficient staff which will ultimately redound to the benefit of the customers of that brokerage firm. The better qualified management and staff in insurance and risk management should be a distinct advantage for you the customer. A proven track record and history in representing its clientele with their claims against insurers are all hallmarks of a trusted insurance broker. Obtaining referrals or testimonials from current customers of that Firm would also aid in the decision to retain a competent insurance broker.

3. What are the major differences between insurance agents and insurance brokers?


Insurance Agents

Insurance agents are insurance professionals that serve as an intermediary between the insurance company and the insured and are most times referred to as sales representatives. As a broad statement of law, an agent’s liability to their customers is purely administrative. That is, agents are only responsible for the timely and accurate processing of forms, premiums, and paperwork. Agents have no duty to conduct a thorough examination of your business or to make sure that you have appropriate coverage. Rather, it is your obligation to make sure you have purchased needed coverage. Generally, in Guyana, insurance agents are employed by the insurers that they represent and, as such, are deemed to be agents of the insurers with which they are contracted or licensed.

Insurance agents can be either:

Captive – A captive agent is an agent who works for only one company and is a “captive” of that company. A captive agent will sell policies only for that single insurer. This would describe all of the sales representatives employed by various insurers in Guyana.

Independent – An independent agent is one who works as an agent for more than one insurer. An independent can produce policies from several insurers and offer some comparisons of different insurance policies. These are hardly present in the Guyana market.

Insurance Brokers

Insurance brokers can best be described as a kind of super-independent agent. Brokers can offer a whole host of insurance products for you to consider. Brokers are required to have a broker’s license which typically means the broker will have more education or experience than an agent. Further, brokers are deemed to be the agent of the insured and thus represent the insured’s interest with all parties to the contract.
Brokers also have a higher duty and responsibility to their clients. Brokers have the duty to analyze your insurance needs whether you are an individual or business and secure correct and adequate coverage on your behalf. This is a higher duty and standard of care and responsibility than the pure administrative duty of the agent. In addition, brokers in Guyana are required to carry a Professional Liability policy that offers protection to you the customers in the event that their advices are deemed incorrect or negligent. Agents are not held to this higher standard.

4. How do brokers earn their keep?

As an Insured, you are generally not required to pay insurance brokers a fee for the work or services that they perform as the brokers are normally remunerated by commissions paid by the insurers with which they place the insurance business. However, if you never had a broker for your policy and approach a broker at the time that you have a loss/claim against an insurer, that broker would more than likely charge you a fee for their services for the settlement of that claim since they would not have accumulated any earnings on your insurance account prior to the negotiation and settlement of the claim.

5. Do brokers accept anyone as their client or customer?

Insurance brokers are generally not discriminatory as it all depends on the particular marketing strategy of that Broker, but RSI would accept you as a customer with a simple motorcycle or motor car. Some brokers may choose not to serve smaller clients but RSI does not discriminate in this regard. We serve from the smallest client to the largest and most complex of risks. There may be situations whereby a customer may be refused on certain grounds.

6. Why should I choose an insurance broker when I can place my insurances directly with an insurer of my choice?

An insurance broker is obligated to place your insurances with an insurer of your choice after he has explained to you all the advantages and disadvantages of each insurer. The broker cannot force you to place your insurances with an insurer that you do not appreciate. Further, rather than you having to physically visit several insurers to get rates, terms and conditions, it would be to your distinct advantage that you retain a competent insurance broker to do that legwork for you and ensure that you obtain the best possible rates, terms and conditions on your policies. Remember, brokers are supposed to be experts in the field of insurance and risk management.

7. What recourse do I have if my broker does not follow my instructions?

For starters, you can terminate the services of that broker immediately by way of a letter to that Firm and copied to your insurer. In addition, you can file a complaint against that broker with the Office of the Commissioner of Insurance that would deal effectively with that complaint based on the grievance procedures in place.

8. What is a risk manager?

Everyday in our lives, we encounter hazards or risks, some of which you are able to manage by yourself but there are others which you just cannot. You need to ensure those hazards are adequately protected. For example, if you have to cross the road, you would incur the possibility of being struck down by a car or any other vehicle. Our usual way of managing that hazard or risk is to be cautious when crossing the road, look right, look left then right again and when it is safe, only then should you should quickly proceed across the road. Similarly, if you own a car or a home or a business, you are exposed to many hazards in the use and/or occupancy of that asset. Whilst driving the car, you could become involved in a major accident; whilst using your home, it could be destroyed by a fire or lightning; whilst operating your business, you could suffer losses by fire, theft or a multitude of other perils. All of these hazards and risks of loss need to be managed and there is only so much that can be achieved by being cautious as in the example illustrated above. Some things are not always within the control of the most prudent of persons and the inevitability of a loss is ever present, hence the reason to transfer that risk to an insurer since the potential consequences of a loss would be too astronomical for a normal person to bear.
A risk manager guides you in identifying all risks to which you or your business are exposed and how you can adequately deal with these exposures in the most efficient manner. Some of the risks may be retained, some may be insured, or some may even be transferred to other parties.

9. Can an insured move his insurance business from one broker to another broker?

Yes, surely. As an insured, you are free to choose whichever broker or intermediary you are comfortable with at any time of the year. Your wishes and instructions must be respected by all parties. This process occurs quite regularly.

10. Is there a time limit on the duration of the appointment of an insurance broker?

There is no set time limit usually upon the appointment of an insurance broker by an insured. You are free to change your mind at any time of your choice or not at all. There are also instances when you may desire to have more than one broker at a time. That is your prerogative and is permissible.

11. What services can I expect from an insurance broker?

Depending on your requirements, a competent insurance broker would, firstly, discuss and analyze your entire situation with you before determining the types on coverage and protection that you require. After that process, they would then approach the various insurers to obtain the most competitive rates, terms and conditions on your behalf. These terms would then be presented and discussed with you along with the advices and recommendations of the Broker in order to obtain your formal instructions on how to proceed with the placement of your coverage. Whenever a claim or a loss occurs, the broker would totally represent your interests with your insurer and ensure that you are fairly and adequately compensated based on the terms and conditions under your insurance policy. For all of these services, you are not required to pay a fee to anyone as the broker earns a commission on the business that he places with the various insurers. Therefore, it is a no-brainer for anyone having to choose who should represent their insurance interests.