The business of the insurance industry is to provide financial protection against a loss caused by an insured peril. The contract is the policy and the premium payment is the instrument binding the contract. Insurance carriers, or insurance companies other wise known as insurers. Offer a contract to customers based on underwriting terms.
Insurance agencies and brokerages conduct the transaction of the business contract between the clients and the insurance companies. Insurance carriers are business companies assuming the financial risks insured under the terms of the policy contract with agents selling and servicing the insurance contract policy for the insurance company the agent, broker or agency represents.
There are two basic types of Agencies or Brokerages many insurance companies employ “captive” agents who are directly affiliated with a specific insurer or insurance company. These agents generally sell only the specific insurance carrier’s policies. Other insurance agencies are considered independent or non-captive these agents are generally appointed by a variety of different insurance companies and given specific binding authority. Independent agents are free to shop the market with the customer’s insurance needs and compare with a variety of insurance companies.
Insurance companies invest the money you pay to have the contract policy and want to gain greater return on the investments in order to cover the costs of an insurance contract or policy being needed to cover a large loss. No one wants a loss or to need to submit a claim, insurance agents work in the field and deal most directly with the customers they serve. Agents, represent the company first because it’s important place high risk in the correct company with the correct premium to cover the terms of the contract. An agent is primarily responsible to the insurance companies they represent.
Customers are also responsible for the solvency of the Insurance Business. Honest answers about risk exposures, assets and liability is important in order to find the insurance contract or policy that correctly reflects our lives. Personal responsibility with finances and keeping a positive credit score allows insurance companies to view us as responsible customers who will act promptly to mitigate damages.
Other Blogs In This Series:
In the Next Blog learn more about what an Insurance Company does to determine premium and what they do with the premiums paid.
Related Blogs:
- Insurance Careers: Intro From Top to Bottom.
- How To Review Your Insurance Credit Score & Other Public Records
- Insurance As A Lifestyle
Glossary of Insurance Terms:
A | B | C | D | E | F | G | H | I | J-K | L | M | N | O | P | Q-R | S | T | U-V | W-Z
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