TO STUDY THE ROLE OF BROKER IN INSURANCE SECTOR

A Project Submitted to

University of Mumbai for partial completion of the degree of

Bachelor in Commerce (Banking and Insurance)

Under the Faculty of Commerce

By
NAMRATA DATTATRAY BANDAL
Class: TYBBI
Roll No: 03

Under the Guidance of

Prof. Ankita Tolia

SANSKAR SARJAN EDUCATION SOCITY

D.T.S.S. COLLEGE OF COMMERCE
Kurar Village, Malad (East),
MUMBAI – 400097
2019- 2020

1
 Declaration by learner

I the undersigned Ms. Namrata Dattatray Bandal here by, declare that work

Embodied in this project work titled “To Study Role of Broker in Insurance Sector”

Forms my own contribution to the research work carried out

Under the guidance of Pro. Ankita Tolia is a result of my own research work and

Has not been previously submitted to any other university for any other

degree\ diploma to this or any other university.

Wherever reference has been made to previous works of other, it has been clearly

Indicated as such and included in the bibliography.

I, here by further declared that all information of this document has been obtained

And

Presented in accordance with academic rules and ethical conduct.

Namrata Dattatray Bandal

Name and Signature of the learner

Certified by

Prof. Ankita Tolia

Name and Signature of the Guiding Teacher

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 Acknowledgment

To list who all have helped me is difficult because they are so numerous and the depth
is so enormous.

I would like to acknowledge the following as being idealistic channels and fresh
dimensions in the completion of this project.

I take this opportunity to thank the University of Mumbai for giving me chance to do
this project.

I would like to thanks I/C Principal, Sushmita Daxini for providing the necessary
facilities

required for completion of this project.

I take this opportunity to thank our Coordinator Prof. Nagaraju Kanduri, for her
moral support and guidance.

I would also like to express my sincere gratitude towards my project guide

Prof. Ankita Tolia whose guidance and care made the project successful.

I would like to thank my College Library, for having provided various reference books
and magazines related to my project.

Lastly, I would like to thank each and every person who directly or indirectly helped
me in the completion of the project especially my Parents and Peers who supported
me throughout my project.

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 Table of Content
Serial No Particular Page
No
1 Declaration I
2 Certificate II
3 Acknowledgement III
4 Table of Content IV
5 Index V
6 List of Table VI
7 List of Graphs/ Diagram/ Chart VII
8 Chapter 1 Introduction 08 - 43
9 Chapter 2 Research and Methodology 44 - 46
10 Chapter 3 Review of Literature 47 - 52
11 Chapter 4 Data analysis and Interpretation 53 - 73
12 Chapter 5 Findings Conclusion and Suggestion 74 - 75
13 Chapter 6 Bibliography 76
Annexure 77 - 79
Questionnaire

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 INDEX
Chapter Chapter Name Page No
No
1 Introduction 08 - 43
1.1 Introduction of Insurance 08 - 10
1.2 History of Insurance 11 - 13
1.3 Broker in Insurance 14 - 15
1.4 Insurance Broker 16
1.5 Reasons why to use Insurance Broker 17 - 18
1.6 Types of Broker in Insurance 19 - 20
1.7 Role of Insurance Broker 22 - 24
1.8 How technology impact the Insurance Sector 25
1.9 Impact of technologies in Brokers Role 26 - 30
1.10 Advantages of using Insurance Broker 31 - 32
1.11 Disadvantages of using Insurance Broker 33 - 34
1.12 Insurance Broker v/s Insurance Agent 35 - 36
1.13 Insurance Brokers Fee 37 - 38
1.13.1 How to become an Insurance Broker 41
1.13.2 Insurance Broker Duties and 42
Responsibility
1.13.3Insurance Broker Requirement 43

2 Research Methodology 44 - 46
2.1 Introduction of Research Methodology 44
2.2 Objectives of the study 44
2.3 Hypothesis 44
2.4 Research Methodology 44
2.4.1 Area of Research 44
2.4.2 Research Design 45
2.4.3 Sampling Method 45
2.4.4 Sampling Size 45
2.4.5 Method of Data Collection 45
2.4.6 Techniques of Data Analysis 45
2.4.7 Research Tool 46
2.5 Scope of Study 46
2.6 Significance of Study 46
2.7 Limitation of Study 46

3 Review of Literature 47- 52

3.1 Introduction
3.2 Review of Literature 47 - 52

4 Data Analysis and Interpretation 53 - 73

5 Findings, Conclusion and Suggestion 74 - 75
6 Bibliography 76
Annexure – Questionnaire 77 - 79

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 Table of Contents
Table No Particular Page No
4.1 Age of Respondents 53

4.2 Gender of Respondents 54

4.3 Marital Status of Respondents 55
4.4 Qualification of Respondents 56
4.5 Occupation of Respondents 57
4.6 Being insured is necessary or not 58
4.7 Respondents are insured or not 59
4.8 Companies from respondents are insured 60
4.9 Respondents heard about Insurance 61
Broker
4.10 Buying Insurance policy from insurance 62
broker is beneficial
4.11 Respondents find their insurance broker 63
4.12 Respondents broker is helpful and 64
knowledgeable
4.13 Respondents satisfaction about their 65
current insurance broker
4.14 Respondents agent is responsive and 66
professional
4.15 Respondents are known about IRDA or 67
not
4.16 Insurance broker and Insurance agent 68
being one and same or not
4.17 Respondents recommendation of their 69
insurance broker
4.18 Technological changes in insurance 70
directly affect brokers role or not
4.19 Respondents know about brokers 71
commission [Fee] or not
4.20 Respondents kept informed by broker 72
during claim process
4.21 Respondents experience of using 73
Insurance broker.

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 List of Graph / Diagram / Chart.
Chart No Particular Page No

4.1 Age of Respondents 53

4.2 Gender of Respondents 54
4.3 Marital status of Respondents 55
4.4 Qualification of Respondents 56
4.5 Occupation of Respondents 57
4.6 Being insured is necessary or not 58
4.7 Respondents are insured or not 59
4.8 Companies from respondents are 60
insured
4.9 Respondents heard about Insurance 61
Broker
4.10 Buying insurance policy from insurance 62
broker is beneficial
4.11 Respondents find their insurance broker 63
4.12 Respondents broker is helpful and 64
knowledgeable
4.13 Respondents satisfaction about their 65
current insurance broker
4.14 Respondents agent is responsive and 66
professional
4.15 Respondents are known about IRDA or 67
not
4.16 Insurance broker and Insurance agent 68
being one and same or not
4.17 Respondents recommendation of their 69
insurance broker
4.18 Technological changes in insurance 70
directly affect brokers role or not
4.19 Respondents know about brokers 71
commission [Fee]
4.20 Respondents kept informed by broker 72
during the claim process
4.21 Respondents experience of using 73
Insurance broker.

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 CHAPTER 1 - INTRODUCTION

1.1 Introduction of Insurance

Insurance is a means of protection from financial loss. It is a form of risk management, primarily
used to hedge against the risk of a contingent or uncertain loss. An entity which provides
insurance is known as an insurer, insurance company, insurance carrier or underwriter. A person
or entity who buys insurance is known as an insured or as a policyholder. The insurance
transaction involves the insured assuming a guaranteed and known relatively small loss in the
form of payment to the insurer in exchange for the insurer's promise to compensate the insured
in the event of a covered loss. The loss may or may not be financial, but it must be reducible to
financial terms, and usually involves something in which the insured has an insurable interest
established by ownership, possession, or pre-existing relationship.

The insured receives a contract, called the insurance policy, which details the conditions
and circumstances under which the insurer will compensate the insured. The amount of money
charged by the insurer to the policyholder for the coverage set forth in the insurance policy is
called the premium. If the insured experiences a loss which is potentially covered by the
insurance policy, the insured submits a claim to the insurer for processing by a claims adjuster.
The insurer may hedge its own risk by taking out reinsurance, whereby another insurance
company agrees to carry some of the risk, especially if the primary insurer deems the risk too
large for it to carry. The insurance industry of India consists of 57 insurance companies of which
24 are in life insurance business and 33 are non-life insurers. Among the life insurers, Life
Insurance Corporation (LIC) is the sole public sector company. Apart from that, among the
non-life insurers there are six public sector insurers. In addition to these, there is sole national
re-insurer, namely, General Insurance Corporation of India (GIC Re). Other stakeholders in
Indian Insurance market include agents (individual and corporate), brokers, surveyors and third-
party administrators servicing health insurance claims.

The Indian Insurance Sector is basically divided into two categories – Life Insurance and
Non-life Insurance. The Non-life Insurance sector is also termed as General Insurance. Both
the Life Insurance and the Non-life Insurance is governed by the IRDAI (Insurance Regulatory
and Development Authority of India). The role of IRDA is to thoroughly monitor the entire
insurance sector in India and also act like a custodian of all the insurance consumer rights. This
is the reason all the insurers have to abide by the rules and regulations of the IRDAI.

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 The insurance industry in India is at the crossroads of development. For any country and its
economic development, having a well-developed insurance sector that is evolving is definitely
a boon. And, if you are wondering what must be the reason for this, then the answer lies in the
fact that this sector provides some long-term funds for the development of the country’s
infrastructure as well as strengthening the risk-taking ability of the country. In India, the rapid
rate at which economic growth has occurred in the past decade is a very significant
development, when you even look at it in terms of the global economic scenario. Know more
about the insurance industry in India in this article. These topics are important for many
competitive and bank exams. Apart from the exam criteria, knowledge of these topics increases
your general awareness too. General Insurance deals with the exposure of risk of goods and
property whereas; life insurance is a way to meet the contingencies of physical death and
economic death. In case of pre-matured death of the assured the proceeds of the policy are paid
to the beneficiaries and annuities protect the assured against economic death when he lives too
long to arrange for his necessities. Life insurance is a contract for payment of sum of money to
the person assured on the happening of the event insured against.

Usually the contract provides for the payment of an amount on the date of maturity or a
specified date at periodic intervals or at unfortunate death, if it occurs earlier. Among other
things, the contract also provides for the payment of premium periodically to the insurer by the
assured. Life insurance is universally acknowledged to be an institution which eliminates „risk‟,
substituting certainty for uncertainty and comes to the timely aid of the family in the unfortunate
event of death of the breadwinner. By and large, life insurance is civilization’s partial solution
to the problems caused by death. Life insurance, in short, is concerned with two hazards that
stand across the life-path of every person: that of dying prematurely leaving a dependent family
to fend for itself and that of living to old age without visible means of support. Life insurance
guarantees 2 full protection against risk of death of the assured. In case of death, full sum
assured is payable. Life insurance encourages long-term saving. By paying a small premium in
easy instalments for a long period a handsome saving can be achieved. Loan can be obtained
against a policy assured whenever required. Tax relief in income tax and wealth tax can be
availed on the premium paid for life insurance.

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 The business of insurance is related to the protection of the economic values of assets and
every asset has a value. The assets are valuable to the owner because he expects to get some
benefits from it. The benefit may be an income or something else. Every asset lasts for certain
period of time during which it performs. None of them will last forever. Human life is a great
asset to a family and has immense value. There is an adverse or unpleasant situation in human
life. Saving through life insurance guarantee full protection against risk of death of the saver
also in case of demise, life insurance assures payment of the entire amount assured with bonuses
wherever applicable.

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1.2 HISTORY OF INSURANCE IN INDIA

In India, insurance has a deep-rooted history. It finds mention in the writings of Manu
(Manuscript ), Yagnavalkya ( Dharmasastra ) and Kautilya ( Arthasastra ). The writings talk in
terms of pooling of resources that could be re-distributed in times of calamities such as fire,
floods, epidemics and famine. This was probably a pre-cursor to modern day insurance. Ancient
Indian history has preserved the earliest traces of insurance in the form of marine trade loans
and carriers’ contracts. Insurance in India has evolved over time heavily drawing from other
countries, England in particular.

1818 saw the advent of life insurance business in India with the establishment of the
Oriental Life Insurance Company in Calcutta. This Company however failed in 1834. In 1829,
the Madras Equitable had begun transacting life insurance business in the Madras Presidency.
1870 saw the enactment of the British Insurance Act and in the last three decades of the
nineteenth century, the Bombay Mutual (1871), Oriental (1874) and Empire of India (1897)
were started in the Bombay Residency. This era, however, was dominated by foreign insurance
offices which did good business in India, namely Albert Life Assurance, Royal Insurance,
Liverpool and London Globe Insurance and the Indian offices were up for hard competition
from the foreign companies.

In 1914, the Government of India started publishing returns of Insurance Companies in

India. The Indian Life Assurance Companies Act, 1912 was the first statutory measure to
regulate life business. In 1928, the Indian Insurance Companies Act was enacted to enable the
Government to collect statistical information about both life and non-life business transacted in
India by Indian and foreign insurers including provident insurance societies. In 1938, with a
view to protecting the interest of the Insurance public, the earlier legislation was consolidated
and amended by the Insurance Act, 1938 with comprehensive provisions for effective control
over the activities of insurers.

In 1914, the Government of India started publishing returns of Insurance Companies in

India. The Indian Life Assurance Companies Act, 1912 was the first statutory measure to
regulate life business. In 1928, the Indian Insurance Companies Act was enacted to enable the
Government to collect statistical information about both life and non-life business transacted in
India by Indian and foreign insurers including provident insurance societies. In 1938, with a
view to protecting the interest of the Insurance public, the earlier legislation was consolidated
and amended by the Insurance Act, 1938 with comprehensive provisions for effective control
over the activities of insurers.

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 An Ordinance was issued on 19th January, 1956 nationalising the Life Insurance sector and
Life Insurance Corporation came into existence in the same year. The LIC absorbed 154 Indian,
16 non-Indian insurers as also 75 provident societies—245 Indian and foreign insurers in all.
The LIC had monopoly till the late 90s when the Insurance sector was reopened to the private
sector. The history of general insurance dates back to the Industrial Revolution in the west and
the consequent growth of sea-faring trade and commerce in the 17th century. It came to India
as a legacy of British occupation. General Insurance in India has its roots in the establishment
of Triton Insurance Company Ltd., in the year 1850 in Calcutta by the British. In 1907, the
Indian Mercantile Insurance Ltd, was set up.

This was the first company to transact all classes of general insurance business. 1957 saw
the formation of the General Insurance Council, a wing of the Insurance Association of India.
The General Insurance Council framed a code of conduct for ensuring fair conduct and sound
business practices. In 1968, the Insurance Act was amended to regulate investments and set
minimum solvency margins. The Tariff Advisory Committee was also set up then.

In 1972 with the passing of the General Insurance Business (Nationalisation) Act, general
insurance business was nationalized with effect from 1st January, 1973. 107 insurers were
amalgamated and grouped into four companies, namely National Insurance Company Ltd., the
New India Assurance Company Ltd., the Oriental Insurance Company Ltd and the United India
Insurance Company Ltd. The General Insurance Corporation of India was incorporated as a
company in 1971 and it commence business on January 1sst 1973.

This millennium has seen insurance come a full circle in a journey extending to nearly 200
years. The process of re-opening of the sector had begun in the early 1990s and the last decade
and more has seen it been opened up substantially. In 1993, the Government set up a committee
under the chairmanship of RN Malhotra, former Governor of RBI, to propose recommendations
for reforms in the insurance sector. The objective was to complement the reforms initiated in
the financial sector. The committee submitted its report in 1994 wherein, among other things,
it recommended that the private sector be permitted to enter the insurance industry. They stated
that foreign companies be allowed to enter by floating Indian companies, preferably a joint
venture with Indian partners.

Following the recommendations of the Malhotra Committee report, in 1999, the Insurance
Regulatory and Development Authority (IRDA) was constituted as an autonomous body to
regulate and develop the insurance industry. The IRDA was incorporated as a statutory body in
April, 2000.

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The key objectives of the IRDA include promotion of competition so as to enhance customer
satisfaction through increased consumer choice and lower premiums, while ensuring the
financial security of the insurance market.

The IRDA opened up the market in August 2000 with the invitation for application for
registrations. Foreign companies were allowed ownership of up to 26%. The Authority has the
power to frame regulations under Section 114A of the Insurance Act, 1938 and has from 2000
onwards framed various regulations ranging from registration of companies for carrying on
insurance business to protection of policyholders’ interests.

In December, 2000, the subsidiaries of the General Insurance Corporation of India were
restructured as independent companies and at the same time GIC was converted into a national
re-insurer. Parliament passed a bill de-linking the four subsidiaries from GIC in July, 2002
Today there are 31 general insurance companies including the ECGC and Agriculture Insurance
Corporation of India and 24 life insurance companies operating in the country.

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1.3 BROKER IN INSURANCE

1.3.1 MEANING AND DEFINATION

A broker (or insurance broker) is a person who is licensed to sell insurance and typically
works with multiple insurance companies offering a variety of products to a customer. As
opposed to an insurance agent, who offers the products of only one company, an insurance
broker is able to compare numerous products of the companies he/she works with and thus is
often seen as a more consumer-friendly option.

Some insurance companies work with insurance agents only; their products are not
available through the brokers (e.g. State Farm). A broker is typically rewarded through a
commission from the sales. When working with an insurance broker, it is important to
understand how many different providers a broker works with as well as the insurance products
he/she can offer.

An insurance broker is a professional person or a business, applying their knowledge and

expertise to help you find the best insurance for your specific needs, at the right price. They
work for you, not a specific insurer, so they can give you information about, and access to, a
range of policies from different insurers. They can also provide a helping hand if you ever need
to claim.

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 Brokers are independent, but there are other types of intermediaries – such as consultants,
agents and advisers who might not be. Some only offer policies from one insurance company
so make sure you check before asking for their help. An insurance broker acts as an intermediary
between you and the insurance company, based on your needs, not theirs. While your insurance
broker can arrange cover for you, and help with other admin and claims, they’re not the ones
who provide cover or pay out on your claim. That’s down to the insurer.

An insurance broker acts as a link between insurance companies and on your behalf as
the client. When you are considering buying an insurance product but you are not familiar with
its intricacies, it may be an idea to make use of an insurance broker. An insurance broker is not
tied to an insurer unlike an insurance agent, who represents only the insurer(s) it acts for. The
brokers’ profession requires them to act on your behalf and to identify your requirements to be
in a position to scan/peruse the market to find a product or more that will suit your needs. A
cheap insurance policy is not necessarily the best option for you – the policy may come with a
high excess and/or more exclusions, which you may only find out at the time of making an
insurance claim.

Insurers are expected to highlight the key facts of a policy when you take one out, and
your broker, if using one, should go over these with you to ensure you understand what the
broker is proposing for you to buy and what you are expected to do over the length of the policy,
if any special requirements apply – commonly known as “warranties” Insurers are expected to
highlight the key facts of a policy when you take one out, and your broker, if using one, should
go over these with you to ensure you understand what the broker is proposing for you to buy
and what you are expected to do over the length of the policy, if any special requirements apply
commonly known as “warranties”

Comparison insurance websites allow you to compare different policies on the market, but
not all insurers will be on the comparison sites – so it is not an exhaustive comparison of what
is available on the market. Also, to note, the comparisons websites do not compare like with
like, so whilst a policy may include one feature, another may not. Such sites do not cater for the
Guernsey customer – so be cautious when buying insurance over the internet. It goes without
saying, that the cheapest policy is not necessarily your best option.

Brokers are aware of the terms and conditions, benefits and exclusions and costs of a wide
range of competing insurance policies, so they can help you find the most appropriate cover for
your own circumstances. Brokers can help arrange and place the cover with the chosen insurer
and can often provide advice on how to make the most of your insurance budget.

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 1.4 INSURANCE BROKING
World Scenario

In the developed world, insurance broking came into existence about twelve decades back.
From being a matchmaker between insurance companies and business firms earlier, the scope
of the broker has expanded to providing various value-added services. Apart from structuring
and placement of insurance cover, these include claims management, risk management,
alternative risk transfer mechanisms, employee-benefit solutions, captive management,
actuarial services, HR outsourcing, political and environment risk advice, pre emergency
planning and evacuation, business continuity planning etc. The Broking concept is so well
established in the Western markets that close to 80-90% of all corporate/ commercial insurance
business is transacted through Brokers and not directly between Insurers and Clients.

Indian Scenario

India has been a rather late starter. The IRDA brought out its first set of regulations,
permitting Brokers to operate, as recently as October 2002. The first set of Licenses was issued
only in Jan 2003 (India Insure being the first to have been granted the License).

In India, Brokers are different from other Insurance service providers in several ways.
Unlike an Agent (or a corporate agent), who represents a specific Insurer only, A Broker
REPRESENTS THE CLIENT, and not the insurer. He can approach all Insurers for a
competitive quote. A Bancassurance outfit (commercial banks), is normally an Agent and not
a broker. A Third-Party Administrator (TPA; sometimes confused with a Broker) is a service
provider for Insurance companies, providing services related to health insurance only.

Brokers are highly regulated. Apart from a minimum paid-up capital of Rs 50 Lacs – Rs 250
Lacs (based on the type of License), Brokers need to be had fully trained staff and proper
infrastructure. IRDA has licensed more than 250 brokers over the last few years. While most
are regional players with either a local or regional presence only, there are some who have a
national footprint.

IRDA has permitted 3 types of Brokers to operate in India:

• The Direct Broker (between end-users and primary insurers only),

• Re-insurance Brokers (between primary insurers and re-insurers only) and He can approach all
Insurers for a competitive quote.
• Composite Brokers

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 1.5 REASONSE WHY TO USE OF INSURANCE BROKER
An insurance broker can save you time, money and worry. Just like an accountant or lawyer
who provides you with professional advice, based on years of training and experience, a
qualified broker can do the same with your insurance. Insurance can be incredibly complicated
to fully understand, and an insurance broker can help you understand the details of a policy and
also work out what level of cover you need so that you are properly protected.

1. FAMILIARITY

Are you familiar with the insurance product you are about to buy? If the answer is no, it is
recommended that you make use of an insurance broker to provide you with objective advice.
An insurance broker is an expert in the insurance field to provide best advice.

2. OUR NEEDS

Be open and share with the insurance broker all your requirements, relevant current
circumstances or information to enable the broker to make a correct assessment of the product
that will best cover your insurance risks. Whilst we know the Bailiwick is a small place and we
prefer to keep our personal information private; the broker is required to treat all your
information with utmost confidentiality, and should form part of the Terms of Business
Agreement that you enter into with the broker.

3. EXPLANATIONS YOU UNDERSTAND

Your insurance broker should make time to explain in simple English language all the terms
and conditions attached to a policy that you are proposing to buy, and once you have agreed to
buy the policy, to go over them again with you to ensure you agree to the terms and conditions
Ask your broker if there is a cancellation policy applicable to your policy, so that if you change
your mind you may cancel your policy within the period specified in your insurance policy.
17
4. CHARGES

Depending on the type of insurance you are buying, brokers may receive remuneration
from the insurer from whom you bought your product, or if buying long term insurance, many
brokers have moved to offering advice on a fee basis, which would be payable whether or not
you take up their advice. Whichever the mode of remuneration, or charges, a broker advising
on long term insurance is required under the Bailiwick laws to disclose the amount of that
remuneration to you before you sign on the dotted line. When buying general insurance
products through your broker, and the broker is silent on details of their charges and
remuneration, you are entitled under the law to ask for these.

5. MAKING AN INSURANCE CLAIM

More often than not, the insurance broker from whom you bought an insurance policy will
assist you in making an insurance claim under that policy and liaise on your behalf with the
insurer and the loss adjuster. You need only ask if they will provide this facility to you.

• Assessing your individual needs and obtaining quotes. Depending on the property, vehicle or
business being insured, this might include performing an insurance valuation, taking
photographs or obtaining an inspection report.
• Comparing the coverage of different insurers to get you the best rates and conditions in an
unbiased manner and making recommendations.
• Searching for opportunities to reduce overall premiums by combining different types of
insurance for discounts.
• Explaining premiums, terms, conditions and any small print that you don’t understand.
• Providing administrative follow-up, such as mortgage changes, certificates of insurance.
• Providing advice and revisions at policy renewal or mid-term if material changes are necessary,
such as a move or the sale of an asset.
• Being available to answer questions after purchase. The vast majority of brokerages are well
established in their community and insurance is their primary business.
• Ensuring claims are fairly handled. They help you with the process and ensure a fair and speedy
settlement. Brokers make a positive difference to an insurer’s pay-out in a substantial number
of claims.

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 1.6 TYPES OF BROKER IN INSURANCE

Insurance is contributing a lot to the general economic growth of the society by reducing
or eliminating the risk of loss to life and property. It is a developing sector and holds a bright
future for people who’re interested to develop their career in it. So, listed here are the types of
insurance brokers and their roles and responsibilities.

Three Categories of Insurance Brokers:

1. Direct Broker

2. Reinsurance Broker

3. Composite Broker

➢ Direct Broker –

An insurance broker, in exchange for fees or remuneration, works between clients and
primary insurers only. Brokers can apply for license in any one of the below-said: (1) Direct
life insurance, (2) Direct Non-Life Insurance, (3) Direct Life & Non-Life Insurance. The capital
requirement for a direct broker is Rs. 75 lakhs.

The functions of a direct broker include one or more of the following –

• Gathering each and every information relating to client’s business and risk management
philosophy so this can be explained to an insurer and others at ease.
• Providing advice on needed insurance cover and terms.
• Maintaining knowledge of available insurance markets and claim records.
• Submitting quotation from insurer to client for consideration.
• Providing essential underwriting information required by an insurer in determining the risk to
evaluate pricing terms and conditions for policy.
• Acting instantly on a client’s instructions and delivering him written reports and
acknowledgements.
• Helping a client in the negotiation of the claims and paying premium under section 64VB of
Insurance Act, 1938. (4 of 1938).
• Delivering services like insurance consultancy and risk management as per regulations.

19
 Consideration of application:

(1) The Authority while considering an application for grant of a licence shall take into account,
all matters relevant to the functions by the insurance broker.
(2) The authority in particular shall take into account the following namely
A. Whether the applicant is not suffering from any of the disqualifications specified under sub
section [5] of section 42D of the act.
B. Whether the applicant has the necessary infrastructure, such as, adequate office space,
equipment and trained manpower of effectively discharge his activity.
C. Whether any person, directly or indirectly connected with the applicant, has been refused in the
past the grant of licence by the authority.

➢ Reinsurance Broker –

A broker, in exchange for fees or remuneration, acts as an intermediary between primary

insurers and reinsurers only. The capital requirement for a reinsurance broker is Rs. 4 crs. The
clients are only insurers or/and reinsurers in India or abroad.

The functions of a reinsurance broker include one or more of the following.

• Collecting and maintaining information about the client’s business and risk retention
philosophy to assist the reinsurer or others.
• Providing advice based on technical data on the policies available in the international
insurance and reinsurance markets.
• Maintaining a database of reinsurance markets available that includes solvency ratings of
individual reinsurers.
• Negotiating with a reinsurer on behalf of clients.
• Suggesting a reinsurer or a set of reinsurers.
• Delivering consultancy and risk management services for reinsurance.
• Rendering help in the negotiation, settlement of claims, and in case of commutation of
reinsurance contracts.
• Providing a client with written acknowledgments and various reports.
• Obtaining and forwarding premiums within time as agreed upon.
• Giving Preliminary Loss Advice (PLA) within the prescribed time.

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➢ Composite Broker –

An insurance broker, in exchange for fees or remuneration, arranges insurance between

clients and primary insurers only and/or reinsurance between primary insurers and reinsurers
only. Brokers can apply for a license in any of these two: (1) Composite (Non-Life) (2)
Composite (Both). The capital requirement for a composite broker is Rs. 5 crs.

The functions of a composite broker shall carry out the functions mentioned in the above
two cases. In case if the insurer assigns the composite broker as a reinsurance broker for
selling reinsurance on the same risk on which the composite broker acted as a direct broker,
the composite broker can make sure that the interests of the client and insurer are not biased.

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 1.7 ROLE OF INSURANCE BROKER
With the Fourth Industrial Revolution, insurance brokers are shifting to more advisory-
based approaches, where they help clients in overall risk management on top of their traditional
roles of placing insurance. In this article, we take a look at the insurance broker’s traditional
role before exploring the ways they are adapting to add more value for their clients in both the
present and the future.

1.7.1 PAST: TRADITIONAL ROLE

Insurance brokers have always performed their roles as intermediaries between clients and
insurance companies (or insurers) by dealing with insurance companies on behalf of clients.
While insurance brokers have access to a variety of insurance products, they also customise
existing insurance products or develop new ones.

Generally, the traditional role of a broker includes:

• Obtaining quotations from multiple Insurers

• Choosing a lead insurer
• Negotiating terms and conditions with the lead insurer
• Getting client agreement on terms with the lead insurer
• Securing 100% placement of the risk with insurers
• Producing policy documents, invoices, and other documentation
• Handling premium collections, changes in cover, claims handling and collection of claim
payments
• Maintaining relationships with engineers, photographers, surveyors, financial institutions and
insurance companies
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 1.7.2 PRESENT AND FUTURE: ADVISORY ROLE

Over the years, competition among brokers has been increasing, which resulted in brokers
pushing the envelope of traditional services to include advisory or risk management services.
With the Fourth Industrial Revolution, businesses are galvanised to operate in innovative,
smarter ways while integrating technology to their daily processes.

Currently, most global brokers go beyond just arranging insurance, they provide risk
management and advisory services. They also emphasise the creation of specialist teams,
experts in particular risk area to better address client needs at a high level. Brokers have adopted
various client-servicing strategies:

• In-house expertise: A strategy where brokers hire expertise in-house and form specialist teams
for different risk areas or for different advisory functions (such as actuarial, analytics,
consulting). For example, JLT Asia has Mergers & Acquisitions (M&A) lawyers in our M&A
team and marine biologists in our Food & Agriculture team.
• Acquisitions: A strategy where brokers take the inorganic route to offer specialist services, such
as acquiring a technology or actuarial firm or a specialist broker.

Based on one-on-one interviews with SME representatives conducted by PKF Littlejohn in

November 2016, the impression of the insurance broking industry has always been
transactional, rather than advisory, among SME businesses. The interviewers found that these
businesses are generally satisfied with this transactional relationship and are happy to
recommend them to other businesses. Businesses with more complex risk profiles acknowledge
the value of their brokers’ risk advisory roles. Furthermore, over half of those surveyed
indicated their willingness to spend more time with their brokers to discuss elements of their
businesses and the risks they face.

Presently, the typical value-add services provided by insurance brokers are risk management
services and data analytics:

Risk advisory or risk management services:

• Loss prevention and risk management
• Valuation services
• Claims advocacy, advice and collection
• Market access and expertise

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 1.7.3 Typical work activities:

Activities depend largely on the size and nature of the employer and the scale of the
business. In a large company, a broker may specialise in a core area; in a small firm, a broker
could be involved in most functions, including new business development and acting as placing
broker and claims broker.

Tasks often involve:

• Gathering information from clients, assessing their insurance needs and risk profile;
• Building and maintaining on-going relationships with clients including scheduling and
• attending meetings and understanding the nature of clients' businesses or lives;
• Foreseeing clients' insurance needs, such as policy renewals;
• Researching insurance companies' policies and negotiating with underwriters to find
• the most suitable insurance for clients at the best price;
• Arranging specialised types of insurance cover in complex cases; this may involve
• preparing reports for insurance underwriters and surveyors and negotiating with
• insurers;
• Advising clients on risk management and helping to devise new ways to mitigate risks,
• for example, by adding security measures such as fencing, surveillance cameras or
• lighting to commercial properties to reduce the likelihood of break-ins;
• Renewing or amending existing policies;
• Advising clients whether and when they need to make a claim on their policies;
• Marketing and acquiring new clients;
• Developing relationships with underwriters, surveyors, photographers, structural
• engineers and other professionals;
• Administrative tasks such as dealing with paperwork, correspondence, keeping
detailed records;
• Winning accounts against competitors;
• Keeping up with changes in the insurance market and in the clients' industries;
• Collecting insurance premiums and processing accounts.

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1.8 How Technology Impacts the Insurance Sector

While e-commerce giants like Texas Farmers Insurance Company, Allstate Texas Lloyd's,
Liberty Insurance Corporation and ASI Lloyds to name a few are challenging traditional ways
of buying insurance, new, fast and more reliable ways of insuring self, goods, properties and
commodities are being set up to enhance end user experiences and settling insurance claims.
The market trends are evolving from traditional broker-based scenarios to a more subtle direct-
to-market approach where middlemen are cut off and the brokerage benefits are passed directly
to the consumer. Also, considering how insurance policies were underwritten previously, today
companies are able to transform the data provided by potential customers into actionable
insights and directly assess individual risks rather than rely upon customers to answer a set of
standard questions to evaluate them.

Technology, considering the ongoing market trends and customer preferences as on today,
is no longer a "nice to have" notion but a crucial differentiator clearly spelling out success and
failure - Insurance companies have to keep pace with cutting edge technologies and constantly
enhance end user experiences to challenge competitors and remain competitive.

Insurers faced a pressing problem last year a surge in home insurance claims following
destructive floods in Kerala. As applications for relief from devastated regions mounted,
Reliance General Insurance decided to deploy a video conversation feature, used to process
motor vehicle claims, to quicken claims processing.

We took a blended approach and did a few home insurances claims on video on an
experimental basis,” said Rakesh Jain, CEO, Reliance General Insurance, referring to the Kerala
home insurance claims. The company is investing $10-12 million every year to upgrade
technology. It was among the first to assess motor vehicle claims through video chat two years
ago. Of the 30,000 such claims it receives each month, around 55% get processed through use
of video. Indian companies are realising that they are sitting on a lot of data, and are looking at
how to unlock it,” said Subram Natarajan, chief technology officer, IBM India and South Asia.
IBM works with a number of insurance firms on outcome-based design, or creating products
tailored to specific customer needs.

Only 4% of India is insured, which means “there are plenty of opportunities to grow,”
Natarajan said. The reach of life insurance in India was under 1% when the industry opened up
to private players in 2001. It is still among the lowest globally, according to a report by the
Insurance Regulatory and Development Authority of India.

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1.9 IMPACT OF TECHNOLOGIES IN A BROKER’S ROLE

With the recent acquisitions of digital technology firms by the major carriers Berkshire
Hathaway and Allstate, a new type of digitally enhanced, consumer-focused insurance
distribution model is beginning to take shape, offering a better way of doing business for the
entire insurance industry — carriers, brokers and independent agents alike

It is clear that insurance distribution channels are rapidly evolving, as the legacy systems of
web-based lead generation used by the insurance industry for years no longer works for today’s
fast-paced business climate. A new, digitally enhanced model increases the customer-centricity
of the industry and promises to help agents together with customers manage all of their
insurance needs from a single source.

Brokers and independent agents have always been the key to delivering consumer-centricity,
and digital solutions only enhance that. Prior to digitization, independent agents and brokers
provided an analog version of a consumer-centric model through relationships with millions of
consumers.

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➢ Automated Underwriting:

Automated underwriting is a decision for a claim underwriting that is generated by

computer software. Typically working off of an algorithm, automated underwriting in insurance
systems use data from credit history and insurance telematics to reach a decision and often an
accompanying interest rate. The decision from an automated underwriting is the first step in
applying for an insurance claim or the like, where a manual review is usually called for next to
check for quality assurance.

There are plenty of advantages to using an automated underwriting system in place of a fully
manual process when working with claims management software. Each of the advantages of
claims processing automation described below can be realized by investing in a PaaS solution
like the one Mendix provides. Mendix empowers digital insurance companies to develop all
kinds of different enterprise applications for both consumer and internal use, with automated
underwriting only being a single example.

A key factor that will affect the operations of insurance brokers is the extent to which
insurers employ the manual underwriting of commercial insurance risks. The overall market
opinion is divided; on one hand, some insurers conceive manual underwriting as inefficiency
that could be resolved by applying technology, whereas other insurers still value the expertise
of the insurers as they understand risk and market factors. In this competitive industry, insurers
seek cost savings and there is a higher demand for automated data exchange between brokers
and insurers.

A digital insurer that has adopted an automated underwriting system also gains time,
research, and resources to invest in the future of insurance. These new products can incorporate
the newly automated processes or be a part of entirely new product sectors for the insurer, such
as health insurance innovation.

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➢ Internet of Things (IoT):

For a conservative industry with a reputation of being slow to change, the insurance
sector has seen significant disruption and innovation over the last five years. Insurers have been
making major investments in digital initiatives as they seek to innovate customer and
distribution relationships. Alongside this, a pioneering insurance sector has emerged to exploit
the digital opportunity – sometimes complementing, sometimes competing with the traditional
sector. But the most dramatic changes relate to the Internet of Things (IoT).

In every insurance sector, IoT promises to substantially reduce losses and transform the
relationship with policyholders. For example, recent automobile insurance commoditization has
placed downward pressure on premiums. And IoT allows insurers to provide value-added
services, such as driver feedback, that can lead to a closer, more proactive relationship with
policyholders while generating new revenues. These advantages apply across the organization.
For actuaries and underwriting, IoT provides rich new data to more accurately assess and price
risk. From a claim’s perspective, IoT can power automated loss notification based on sensor
data. For marketing executives, IoT brings opportunities for unprecedented insights into
customer behaviour.

In 1997, Progressive Insurance pioneered the use of the Internet to purchase auto
insurance online, in real time.1 In a conservative industry, Progressive’s innovative approach
broke several long-established trade-offs, shaking up traditional distribution channels and
empowering consumers with price transparency.

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 The IoT comprises data flowing to and from sensors that are attached to individuals, buildings,
machines or the environment. With the increasing use of IoT devices, large amounts of data
from clients are available. This presents the opportunity for brokers to analyse such data and
provide risk management advice to clients and accurate, near-real-time snapshots of risk
profiles to insurers.

➢ Artificial Intelligence (AI):

Currently, the penetration of AI is primarily within underwriting automation in personal

lines and micro-SME insurances. For insurance broking, AI would have the following impact:

• Accelerating claims processes

• Quickening risk analyses
• Enabling compliance to identify common issues
• Reducing instances of fraud

As AI capabilities develop, insurance brokers have the opportunity to harness its ability
to add more value to their services. In this scenario, specialist expertise would provide brokers
with an edge over the competition. AI is already embedded within insurance, primarily by
insurers using big data and algorithms, which enable them to automate underwriting, claims
decisions and processes to bring elements of consistency and efficiency. Brokers should be
seeing the effect of some of these changes. An increasing number of underwriting and claims
decisions are being automated, however, one of the roles of a broker is to negotiate on behalf
of a client, when the ‘computer says no’. Brokers can complement an insurer’s use of big data
by adding a granular level of data not readily available to them; for example, a business’ culture
and its approach to risk management. There is a risk, however, that automation and big data
could marginalise a certain sector of brokers who work with specific product types, as we have
seen in the household and personal motor markets.

The advance of the Internet of Things (IoT) will have an impact on household and personal
health insurance, as data derived from wearable technology, linked personal devices and
household technology is harnessed. It’s conceivable that these technological advances will find
their way into the commercial insurance sector, which is the traditional heartland of insurance
brokers in the UK. It could be argued that people are one of the biggest factors in insurance
claims, so the introduction of smart manufacturing processes and monitored warehouses could
reduce the human element in factories and warehouses and potentially bring down premiums.

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 Insurance, specifically commercial insurance, is still traded by people and relationships,
however brokers should not be complacent to the advances in technology & AI. In addition to
keeping up with new knowledge and risk management techniques that will inevitably follow,
brokers could be placed under additional pressure to demonstrate their value in the distribution
chain. There is no doubt that the insurance industry will experience an accelerated pace of
change as with the other industries going through the Fourth Industrial Revolution. While
intermediaries like insurance brokers adapt to their clients’ and insurers’ changing businesses,
those with a highly strategic mindset can see beyond the need to evolve and harness the
opportunities that abound with the changes of the future.

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1.10 ADVANTAGES OF USING INSURANCE BROKER
When buying insurance, you can choose to buy from an insurance agent who represents a
specific insurance company, or you can choose to purchase your insurance through an
independent insurance broker. Often, an independent broker can prove to be the better choice,
and it's easy to find the cheapest insurance premiums from a broker in your area online. Here
are some of the advantages of purchasing your insurance through an independent insurance
broker:

1. An insurance broker works for you - not the insurance company.

Your insurance broker is not tied to a specific company or a specific company's products.
They can search a number of companies and their offerings to find the best deal for you. A
broker can take a thorough look at your personal needs and recommend the best coverage for
you based on your situation. Brokers who are registered with the Insurance Broker's Association
of Ontario (IBAO) are bound by the organization's Code of Ethics to find the best coverage
available for their clients. Brokers can get you the best deal available from their portfolio of
offerings, while agents are bound to represent a specific company, and are therefore more
limited in the number of products they can offer. They can only recommend and only have
access to their own company's products, which may or may not be the right fit for your specific
insurance requirements.

2. Brokers are experienced and professional.

Brokers deal with a wide range of products and services and are qualified to recommend
the policies that best suit your needs from a broader portfolio of options than a direct insurance
agent. They typically have experience with clients dealing with losses and can guide you
through the often confusing and stressful claims process, answering any questions that you may
have

3. Brokers (in Ontario) are licensed through the Registered Insurance Brokers of

Ontario (RIBO).

RIBO was established in 1981 and is a self-regulated organization that authorizes the
licensing of brokers for all general insurance in Ontario. Brokers are required to meet RIBO
requirements in ethical conduct, professional competence and insurance related financial
obligations. RIBO provides brokers with the opportunity for life-long learning. Brokers are
required to earn additional education credits each year to ensure that they stay up to date on the
latest developments in the insurance industry and offer comprehensive advice and knowledge.
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4. Your privacy is protected.

Brokers are required by their Code of Ethics to maintain your privacy and keep all client
discussions and information completely confidential.

5. Brokers give full disclosure on commission rates and their effect on your

insurance premiums.

Brokers are required to disclose their commission rate and the effect this has on your
insurance premiums. Broker compensation is included in your premium payments and your
broker will provide you with a statement at the point of sale that tells you how much of your
premium goes toward the broker's commission. This allows you to make an informed choice
when buying insurance. Brokers in Ontario are also required to declare any financial links with
specific companies that could be considered a conflict of interest. For example, your broker
must disclose any ownership position they may have in a specific insurance company, or any
loans or financial relationship they may have with a specific company. It all comes down to
providing you with all the information you need to make an informed choice when you decide
which policy is right for you.

Choosing an insurance broker means that you have a professional on your side when
choosing the best policy for yourself and your family. Brokers offer professional and unbiased
advice, ethical conduct, and full disclosure of all the information you need to make an informed
decision

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1.11 DISADVANTAGES OF INSURANCE BROKER

The benefits of insurance were mentioned above – they completely lead the client from the
moment of the meeting to the conclusion of the contract, advocate for the interests of the person.
But there are also disadvantages of such a profession: Lack of professionalism among small
brokers. At the moment, brokers who know all the nuances and little things are few. But
scammers who want to cash in on others, posing as specialists, are much more.

You may not need all of the additional coverage that the broker suggests. Keep in mind your
goals of what/who you want to protect and talk to your agent about how best to acquire that
coverage. You’re not working with one. An insurance agent represents one or more insurance
companies or carriers. He or she acts as an extension of the insurer and is compensated at a
higher percentage level of commissions for the higher amounts of carrier-specific or company-
relationship products they sell.

An independent insurance broker, on the other hand, represents the insurance buyer and can
place the buyer with products from any carrier that allows independent insurance brokers to sell
their products. Both agents and brokers are able to insure you but the underlying motivations
are on either side of the relationship between insured and carrier.

Insurance brokers act as intermediaries between large insurers and consumers. Some
businesses and individuals will only purchase insurance through a broker. Others have different
feelings and do not use brokers. Brokers might not be for everyone especially if personal
insurance needs are very simple.

1. Limited selection –

There are brokers who do not cultivate relationships with a wide range of insurers. These
brokers choose to work with just one or two insurers. This could be because the broker is
comfortable with those companies or because there is a perception that just one or two providers
are enough to handle all client needs.

Some insurance brokers do not cultivate relationships with a wide range of insurers. These
brokers choose to work with just one or two insurers. This could be because the broker is
comfortable with those companies or because there is a perception that just one or two providers
are enough to handle all client needs. Hiring a broker who only works with one or two insurers
could result in policies that are not a good fit for a family.

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2. Pressure –

Some individuals do not want to deal with brokers because of the sales pressure and tactics
that could be employed. Consumers have started to turn more towards the Internet for research
about certain products in order to avoid high-pressure sales environments.

Insurance brokers are essentially salespeople. They make a living by selling insurance
products to consumers. Some individuals do not want to deal with brokers because of the sales
pressure and tactics that could be employed. Consumers have started to turn more towards the
Internet for research about certain products in order to avoid high-pressure sales environments.

3. Disclosure
A large reason that some consumers avoid insurance brokers is because of a lack of
disclosure. Brokers are paid by insurance companies under any number of different pay
structures. The possibility exists that a broker might decide to push a particular product or policy
aggressively because it will garner the highest compensation possible. This means that the
broker is really working for the insurance company or personal gain and not for the customer.
This is not always the case although it is hard to tell the difference between brokers.

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1.12 INSURANCE BROKER V/S AGENT

Those on the hunt for corporate insurance will quickly discover that not only do countless
plans exist, but so do a variety of different distribution channels in the market. There are
insurance companies that you can buy from directly, agents who will sell plans on the insurers’
behalf, and brokers that search and compare coverage for you. When it comes to understanding
why you might choose one option over the other, Pacific Prime has the information you’ll need
to find out which fits best with your business’ needs. Read on to learn more about insurance
brokers vs agents today.

1.12.1 Buying directly from an insurance company

Insurance companies only have the authority to sell their own policies. When searching for
insurance solutions, buyers often assume that because it is the most “direct” approach to
purchasing insurance, buying directly from an insurer is likely cheaper and less time consuming
than buying through a broker/agent. While this can sometimes be true if you have a solid
understanding of the insurance market and its products, it is often not the case.

For one, the process of researching and comparing plans without the help of an advisor
can be arduous for any business owner or HR team, as it requires a significant amount of time
to understand each and every option to determine whether they’re the right fit for the business.
Without assistance from an expert, there’s also a greater risk of securing an ill-fitting plan for
your business and staff, which can be incredibly costly in the long run. A good broker or agent
can advise you at no extra cost.

While the absence of an intermediary, such as an agent or a broker, could result in a cheaper
premium, it is usually not the case. This is due in part to the reliance on third parties to drive
business to insurance companies We may have heard the terms ‘broker’ and ‘agent’ tossed
around. While both are professionals in the insurance industry, these two job titles have some
distinct differences. Both insurance brokers and insurance agents act as intermediaries between
insurance buyers and insurers. They both must also have the appropriate licenses to distribute
the insurance they are selling, while also adhering to any laws or regulations enforced by local
insurance departments. The primary difference between an insurance broker and an insurance
agent is who each represents. While a broker represents the insurance buyer, an agent represents
one or more insurance companies. Some brokers are also specialists in certain products (e.g.
group health insurance), and even offer additional services depending on their area of expertise.

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 1.12.2 What do insurance agents do?

Insurance agents have the authority to sell and, sometimes, adjust coverage on the behalf of
one or multiple insurers – usually with the goal of maximizing insurer sales and profit. Some
key features that sets agents apart from brokers include:

• An agent is either captive, or independent. Captive agents are those that can only represent one,
single insurer, whereas independent agents represent multiple insurers.
• Agents operate on behalf of insurers, and not the buyer. Their aim is to match you with coverage
from the insurers they represent.
• Some agents, but not all, can “bind” coverage under certain circumstances. This allows buyers
to obtain coverage before the insurance company has finished processing the application and
issuing policy documents.
• Agents earn a stable commission from the insurers they’re contracted with; sometimes, captive
agents are salaried.

1.12.3 What do insurance brokers do?

Brokers leverage their expertise to understand their clients’ needs, and help them select the
right insurance solutions at the best possible price. Unlike agents, their duty is to act in the
buyer’s best interests, rather than the insurance companies’. Additionally, brokers:

• Are independent of any insurer, and tend to offer a wide range of plans from many different
insurers
• Will prioritize your interests where there is a conflict with their own interests
• Explain aspects of your policy or note things that you may not have considered

Like agents, brokers can operate very differently too. For example, smaller brokers may
simply offer a review of the best plans, match you with a solution that best fits your needs
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1.13 INSURANCE BROKER FEE

Depending on where you live, and what type of insurance you need, insurance broker fees
may be very important to you, as they can account for a decent chunk of your insurance budget
An agent’s goal is to issue an insurance policy and not have to work on it unless there is an
insurance claim, or at renewal to shop for a lower premium. In some cases, agents charge fees
for non-standard auto insurance policies because they tend to require more work as a result of
cancellations and re-writes due to non-payment of premium.

[Insurance policy cancelled?] Essentially every time an agent has to “touch” a policy, it
costs them money (in the form of time). This sort of activity causes many agents to charge fees
for their service; otherwise they wouldn’t make any money by selling and servicing insured
who require multiple transactions to keep their insurance policies in force.

1.13.1 How Much Are Insurance Broker Fees?

Agents who charge broker fees typically charge what they feel is a “fair” amount. The
consensus seems to be to charge whatever amount adds up to an overall profit of 15% of the
policy premium. For example, if your policy premium is $1,000 and the agent/broker earns a
10% commission of $100, the agent/broker will charge a fee of $50. The total amount earned
would be $150, or 15%.
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 1.13.2 Rules Regarding Broker Fees
If you seek to charge a broker fee for the transaction of personal lines (personal automobile
or homeowners), you must use the Standard Broker Fee Agreement or a custom agreement
containing language that does not conflict with the Standard Broker Fee Agreement. You must
also use the Standard Broker Fee Disclosure Form and provide the insured with a copy of the
Automobile pamphlet or Homeowners pamphlet found on the CDI’s website. (California Code
of Regulations § 2189.1 et seq. “Broker Fee Regulations”) I recommend reviewing the Broker
Fee Regulations on the CDI’s website as they contain other important conditions and
requirements for charging a broker fee for personal lines business.

• Depending on which state you live in, there are certain rules and regulations dictating when and
what an agent can charge in the way of insurance broker fees.
• For example, if a salesperson is operating as an “agent,” under contract for an insurer, they may
not be able to charge anything in the way of insurance broker fees.
• If they are acting as an insurance broker…they can charge whatever you will pay.
• However, they MUST DISCLOSE the amount they are charging you as a “fee.” This means
you must be provided with a document that details the charge and you must sign it.
• If you discover you have been charged an insurance broker fee and have not seen a disclosure,
call your agent/broker and ask for a copy.

1.13.3 Things to Consider When Charging Broker Fees

A broker fee is a fee in addition to premium and commission that is charged by retail and
wholesale insurance brokers and that ultimately is paid by the insurance buyer. Such fees are
subject to two overriding rules: (1) they must be fully disclosed to the insurance buyer and (2)
they must be reasonable.

In addition, broker fees may be subject to specific state insurance regulatory restrictions. For
example, Florida caps retail broker fees at $35, whether admitted or non-admitted. In the surplus
lines market, some states like Minnesota treat broker fees as surplus lines premium and subject
those fees to surplus lines premium tax.

When contemplating whether to charge a broker fee, first determine whether you are acting
as a broker or an agent. Only a producer acting in the capacity of a broker can charge broker
fees. If a producer is acting as an agent for the insurer, the producer cannot charge any fees
related to the procurement of insurance that are not part of the insurer’s rate filing and
authorized by the insurer.

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 1.13.4 IRDA (Non linked Products) Regulations 2019
Insurance Regulatory and Development Authority of India (IRDA) has released (Non linked
Insurance Products) Regulations 2019 vied notification dated 8th July 2019. This regulatory
notification issues clear guidelines protecting the public interest while designing and filing non-
linked insurance products by life insurers of India.

IRDA has made it clear that existing products also will have to be modified within a
reasonable period of time to comply with the new regulations. Let us have a detailed analysis
of (Non linked Insurance Products) Regulations 2019

1.13.5 Objectives of IRDA regulation 2019

• To ensure that insurers follow prudent practices in designing and pricing of life insurance
products and to protect the interests of the policyholders.
• To ensure sound and responsive management practices for effective oversight and adequate due
diligence with regard to designing and pricing of life insurance products.

1.13.6 Highlights of IRDA regulation 2019

• The revival of policies permitted up to five years from the date of discontinuance of the policy.
(Earlier it was up to two years only).
• Guaranteed surrender value of 30 % of total premium paid will be available if the premium has
been paid for at least 2 years. (Earlier surrender was available after the completion 3 years
only).
• Advance collection of premiums allowed up to one year in the same financial year and up to 3
months if due is in the next financial year.
• Commutation of pension will be allowed up to 60 % of the fund value. (Earlier commutation was
allowed up to 1/3 rd. of the fund value only).
• Minimum death benefits in case of single premium (1.25 times of single premium) and regular
premium policies (7 times the annualised premium) stipulated.
• Minimum term (5 years) and minimum premium paying term (5 years) for regular policies have
been defined.
• Settlement option to take claims (death and maturity) in five instalments have been introduced.

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 1.13.6 Death Benefit in Regulations 2019

Minimum Death Benefit

• The minimum Sum Assured on the death during the entire term of the policy shall not be less
than 7 times the annualized premium, for limited or regular premium products
• 1.25 times the single premium for single premium products.
• 105% of the total premiums received up to the date of death.

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 1.14 How to become an Insurance Broker?

1. A company desirous to become a broker must decide the area of operation i.e. Life Insurance,
General Insurance or Reinsurance.
2. A broker represents the client in contrast to agents who represents insurers.
3. A broker may act as Direct or Composite broker.
4. The company must appoint a Principal Officer to carry out the functions as a broker.
5. The role of broker is not just limited to selling of policies but also to guide the insured according
to his need.
6. An application by a person for grant of a licence as an insurance broker shall be made in Form
A to the Authority.
7. An application, not complete in all respects and not conforming to the instructions specified in
the Form A and these regulations, shall be rejected.
8. The Authority may require an applicant to furnish any further information or clarification for
the purpose of disposal of the application, and, thereafter, in regard to any other matter as may
be deemed necessary by the Authority.
9. The broker must not suffer from any disqualification and must fulfil all criteria related to
qualification, training and capital requirements.
10. The broker must fulfil the following capital eligibility criteria:
(a) Direct broker – fifty lakhs
(b) Reinsurance broker – two hundred lakhs
(c) Composite broker – two hundred and fifty lakhs
11. The Authority on being satisfied that the applicant fulfils all the conditions specified for the
grant of licence, shall grant a licence in Form B and send an intimation thereof to the applicant
mentioning the category for which the Authority has granted the licence. The license shall be
issued subject to the insurance broker adhering to the conditions and the code of conduct as
specified by the Authority from time to time.

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1.15 INSURANCE BROKER DUTIES AND RESPONSIBILITIES

• Acquire new clients and win accounts against competitors

• Assist prospective clients with filling out forms, communicating with the company,
finding the best plans and strategies, and negotiating the final deals
• Understand the provisions of each policy and communicate this information to the
customer
• Share client information with insurance carriers to determine which products are best to
recommend
• Act as a liaison between insurers and clients
• Building and maintaining business relationships with clients
• Preparing reports for insurance underwriters
• Research insurance trends, policies and products
• Invent effective marketing strategies to sell insurance plans to new clients or up-sell to
current clients
• Use methods such as networking, cold calling etc to spot opportunities and cultivate trust
with potential customers
• Gauge the condition of business or individual customers and discover plans according to
their requirements
• Collaborate with clients to introduce them with befitting risk management strategies
• Submit regular reviews of progress to interested parties
• Retain and renew bookkeeping systems, database and records
• Oversee insurance claims to ensure fair dealing and satisfaction
• Accomplish predetermined development goals by obtaining new clients
• Follow the market trends and continuously refurbish knowledge on products and services
• Fulfil all policy requirements

42
 1.16 INSURANCE BROKER REQUIREMENTS

• A proven track record of working as an insurance broker

• In depth knowledge of various insurance plans

• Excellent communication, interpersonal and presentation skills

• Highly motivated with a desire to take advantage of new opportunities

• Time management and organisational skills

• [X] degree in Finance or similar relevant field

43
 CHAPTER 2 – RESEARCH METHODOLOGY
2.1 Introduction of Research Methodology

Research is not only concerned to the revision of the facts and building up to date knowledge
but discover new facts involved through the process of dynamic changes in the society.
Methodology is defined as a system of methods and rule to facilitate the collection and analysis
of data. It provides the starting point for choosing and approach made of theories, data, concept
and definition of the topic (Hart, 1998).

2.2 Objectives of study

1. To study about not only Rules and Regulation of Broker but also Commission of Broker.
2. To Know more about Importance and Types of Broker.
3. To analyse the main Role of Brokers in insurance sector.
4. To study about Pros and Cons of using Insurance Broker.

2.3 Hypothesis
H0 Respondents are aware about IRDA.
H1 Respondents are not aware about IRDA.

H0 Broker are Knowledgeable and Helpful.

H1 Brokers are not Knowledgeable and Helpful.

H0 Technological changes in insurance affect brokers role.

H1 Technological changes in insurance not affect brokers role.

2.4 Research Methodology

The researcher adopted convenient sampling technique for the selection of study area. A sample
of 50 respondents was taken. Well-structured questionnaire was used for collecting primary
data by survey method.
The study is designed to gather descriptive information for conducting study in more practical
manner. For testing hypothesis and interpreting relationship analytical study is used, therefore
the study makes use of quantitative research approach.

2.4.1 Area of Research

I have collected data from Mumbai city.

44
2.4.2 Research Design
Research design is a framework or blueprint for conducting the marketing research projects. It
explains the procedure necessary for obtaining the information needed to structure or solve
research problems. The present research design was exploratory in the initial stages then after
gaining the insights into the problem it was verified and quantified by conclusive research. The
form of conclusive research design adopted for the study.
The objective of exploratory research is to explore or search through a problem or situation to
provide insights and understanding. Descriptive studies involve collection of data through
structured design and survey method is followed in order to get the needed information. It is
typically based on representative sample which was used to description and define the
behaviour of the respondents.

2.4.3 Sampling Method

For the present study, the random sampling technique is used. The researcher has selected
respondents from Mumbai city. For the study, the researcher has collected the primary data
from 50 respondents.

2.4.4 Sampling Size

For the study, the researcher has collected the primary data from 50 respondents.

2.4.5 Methods of Data Collection

The present research study is based on primary data. Well-structured questionnaire was
prepared and used for the collection of primary data from the respondents of Mumbai for the
purpose face to face interviews were conducted. With the help of this method primary data
collected in proper manner. Through the personal interview researcher come to know about role
pf broker.
Secondary Data – Books, Research paper, newspaper.

2.4.6 Techniques of Data Analysis

Data analysis is an activity by which raw data collected with the help of a questionnaire,
converted into meaning information for making decisions on objective of the study y. For four
out findings and conclusion researcher was used excel and Graph. Different graphs and table
were used for analysis of data.

45
2.4.7 Research Tool
Questionnaire was prepared with the help of a detailed study of literature available in the field
of investment. The final data was collected with a questionnaire that incorporated certain
changes in the questions.

2.5 Scope of study

The scope identifies the boundaries of the study in term of subjects, objectives, area, time frame,
to which any study is focused.
This study could be carried out from various angles of insurance broker. To know how many
customers are aware about brokers commission [Fees].
This study is an attempt to study about the role of Broker in Insurance Sector. Detail information
about insurance broker.
To study advantage and disadvantages of Insurance broker in insurance sector.
To study role played by broker in insurance sector.
To know about challenges faced by Broker in insurance sector.

2.5.1 Significance of study

Every one should select professional and certified broker as there are many chances fooled by
fake insurance broker who is giving wrong information to their customers and does some fraud
So everyone should aware about this.
In respect of brokers there are many people who will get job regarding advising people about
important of insurance guide them and make their future safe and secured but Insurance broker
or Insurance agent should be well qualified and certified.

2.5.2 Limitation of study

This study is made under quite a few constraints. Hence, the findings of the study are interpreted
with caution. Non-random sampling method is mainly used in the study, hence while
generalizing findings of the study there are certain inherent limitations.
The responses provided by the respondents may not be as precise as desired due to the financial
illiteracy, unawareness and poor knowledge about brokers commission their qualification,
about Insurance agents, role of broker in insurance. Moreover, sampling and non-sampling
errors are also unavoidable while drawing inferences.

46
 CHAPTER 3

3.1 REVIEW OF LITRATURE

A large body of literature on insurance provides the basis for this study. The literature reviewed
mainly consists of journals published by the Insurance Institute of India, Federation of
Insurance Institute, IRDA and insurance magazines. The researcher has also gone through the
websites of various insurance companies and IRDA.

Venkatesh (1987) in his article discussed the importance of personal servicing to customers and
emphasised the importance of satisfying policyholders.

Samuel (2003) traces the question of insurance market in India. The paper deals with the
theoretical aspects, historical perspectives of insurance in India and penetration of insurance in
India and investment of life and non-life insurance. This paper also examines the role of
insurance in financial savings of households. There is low penetration and lack of efficiency.
Per capita premiums are low when compared to the standards of industrialised countries.

Shah (2003) discusses about bancassurance. A bancassurance strategy can succeed only if it
provides a cost-effective way to build distribution capacity. Bancassurance provides a shift
from total dependence on tied agency for existing insurers and it helps to penetrate new market
segments. By successfully making their customer data base and leveraging their reputation and
distribution system, banks can easily achieve outstanding sales.

Watson (2004) explains the importance of insurance penetration in the economic development
of the country. He is of the opinion that India is under insured but Indian life insurance market
displays many essential characteristics of an emerging vibrant and dynamic market.

Arunachalam (2004) explains the importance of data mining in the insurance sector when new
products are introduced. Executives require all types of information in this fast-changing
competitive insurance market. Functional managers require critical information relating to the
percentage of claims processed in time, comparative profitability, customer feedback and time
needed to take appropriate decisions. The key drivers for modern organisations in a competitive
environment will be business intelligence derived out of consolidated data available with
insurance companies.

47
Muralidharan (2004) explained in detail the emerging distribution channels in the insurance
sector. He examined the different distribution modes such as brokers, bancassurance and
internet and also their potential contribution for the growth and development of insurance
industry in India.

Sunil Maheswari (2005) points out that agents in the insurance sector in India are critical for
the success of the organisation. In order to 35 gain competitive advantage, quality people are
needed but this is a challenge. The quality of agents for this purpose lies in understanding the
needs of the customer, analysing their financial status and generating confidence among
potential customers. To make the agents give their maximum, the remuneration system needs
to be modified and training should be provided covering technical and behavioural skills at
different stages of their career.

Prakash Rao B.K.S. and Bh.Venkateswara Rao (2005) have made an attempt to examine the
opportunities for insurers in the rural market. They point out that the new companies entered
into insurance business after liberalisation focused their attention mainly in urban areas. They
also listed the challenges in increasing the insurance coverage in rural areas. It was pointed out
that the cost of building exclusive delivery systems for selling insurance in rural areas is very
high. The second barrier is the paucity of channels to communicate the benefits of products to
the entire rural population. They suggest that by establishing network with rural development
agencies, banks, cooperative institutions and youth clubs, insurance policies can be sold in rural
areas.

Forte (2005) conducted a study a great deal of similarity between the policy actually purchased
by respondents and the policy recommended by the agents, suggesting that a great influence is
exercised by the agents in the selection of insurance products. It is found that insurance
companies have to create awareness about security and savings involved in insurance and
develop the felt-need among these potential customers.

G.V. Rao (2006) in his article talks about the stance that insurers should adopt in the detariffed
regime. The insurers need to demonstrate the consumers that in a post detariffed scenario, they
are much easier and less expensive. He suggests that the insurers have to cut internal costs,
improve professional expertise and change the mindset of the consumers.

48
Alok Mittal and Akash Kumar (2006) in their study made an attempt to identify and explore
the factors which the customers seek before selecting the insurance products offered through
various life insurance companies. The major factors identified are product attributes, 46
customer delight, product flexibility, risk coverage, grace period, professional advisor and
maturity period. All these factors are rated differently. The most important factor is product
attributes and it refers to the product features that the customers take into consideration before
selecting an insurance product. The factor that was ranked last was maturity period.

Sajid Ali (2007) examines the various issues and determinants involving insurance industry in
India and in world insurance context. An attempt was also made to critically analyse the
performance of various kinds of insurance industries and its genesis with a view to measure the
45 development of this sector. The study points out that as a result of liberalisation, there has
been a remarkable increase in the volume of business, number of policies, premium income and
change in the investment pattern of insurance companies.

David Dror (2007) in his article takes a deep look at the Indian micro insurance scenario and
observes that there is a vast potential in the area of micro health insurance in India. He points
out that the Indian health insurance is in the vicious circle of poor products, low demand, low
willingness to pay, lowering of premiums and further worsening of insurance product or
service.

Vadlamannati (2008) in his paper analyses the contribution of insurance sector to the economic
development of India. He points out that the contribution of insurance sector to the economic
development is positive and suggests that in order to make the insurance sector a 47 more
important component of the financial intermediation process, complete deregulation and
increase in the pace of reforms are the need of the hour.

Krishnaswamy (2009) presents a detailed description about insurance intermediaries, IRDA

regulations, insurance products, life insurance claims, bancassurance and insurance marketing
and financial planning.

Sadhak H (2009) made an attempt to study life insurance industry in India in the backdrop of
ongoing globalisation and economic reforms. The study provides an insight into the transition
of Indian life insurance industry since 1818. The study also discussed the issues relating to the
governance through regulations, ethical business practices in life insurance selling and
corporate governance and corporate social responsibility.

49
Achintya Mandal (2009) examines the level of insurance penetration in India and makes an
attempt to describe the present competitive scenario and future challenges and opportunities
that the Indian insurance market is going to face. He points out that as a result of liberalisation
there has been an improvement in the product range, risk coverage, awareness about insurance
and a positive change in the attitude of the public sector insurance companies.

Rao (2010) attempted to ascertain how consumers’ attitude, behaviour and preferences towards
life insurance differ depending on language, education, income, age and gender. The study
revealed that consumers who are older with higher income or more education are more likely
to own life insurance. Consumers have a receptive attitude towards insurance and express
confidence in the insurance industry.Consumers are price conscious and the quality of the
customer service and terms of coverage also influence their decision to buy insurance.

Warrier S.R. (2011) is of the opinion that the combination of high potential and low penetration
makes India and China attractive for global players. Also, both Indian and Chinese economies
have been flourishing, facilitating quicker growth. But this opportunity is not without
challenges like difficulties in reaching out to the large population with a huge geographical
spread, client friendly regulations which are still emerging and low insurance awareness.

V.G. Dhanashekaran (2011) examined the role of insurance brokers and the perception of their
services and observes that the institution of brokers has made a lot of positive difference to
insurance business in India and is growing stronger. The broker has now become a risk
consultant providing various value added services. The result of the survey reaffirm that the
brokers are making a difference to the customers’ business by anticipating trends,
understanding risks, offering choice, structuring insurance programme and management of
claims.

Sudarsana Reddy (2012) has analysed the customers’ opinion on policies between private
insurance companies and public insurance companies and also identified customers’
expectations on private insurance companies’ policies. He stated that most of the respondents
felt that the policies offered by the private insurance companies were upto the expectations of
customers.

50
Jawaharlal and Pareek (2012) have looked into the need for rendering an efficient customer
service in the life insurance sector. It was found that at the time of claim settlement, agents and
brokers did not concentrate on delivering quality customer services. Lack of education and
training of intermediaries were the major constraints in providing quality service. It was
recommended that the companies should keep strong information technology infrastructure to
support both customers and its intermediaries.

Anshuja Tiwari, (2012) evaluated bancassurance model of distribution of insurance services

has been discussed with reference to lift insurance industry. Insurance sector was opened up in
the year of 2000. Before that only individual insurance agent was allowed to sell life insurance
products But catering the need of industry IRDA introduced several other distribution option
like corporate agent, broker, direct selling and bancassurance

Kamal Gulati, (2012) studied customer satisfaction level and analyzed quality of service and
post sale relationship is very important. Many a times in Insurance industry, it is assumed that
“Sell it and forget it” nature of insurance agents and employees. But it is Wrong.

Swadesh Kumar Dash, (2013) evaluated the prospectus and challenges for insurance sector in
growing economy of India. Indian economy is one of the leading economy in the world. After
China, India is fastest growing economy. Insurance sector is growing whenever there is growth
of economy across the world. It declares that there is huge growth potential for insurance sector
in India.

Preeti Upadhyay, (2013) The main objective has studied The Satisfaction level of the policy
folders. Simultaneously It is aimed to study the trends in insurance sector before privatization
and after a decade of privatization. Various products and plans offered by insurance companies
has been studied and awareness about public sector companies and private sector companies
has been analyzed.

Ruby Singh, (2014) Studied the Consumer protection laws and measures in Insurance Sector.
Customer is becoming the kind of any market. He expects fair price of the product, good quality,
product service, fair trade practice and prompt after sales service.

51
Suman Si, (2014) The impact of advertisement on decision making of consumer i.e.
Policyholder has been studied. The Study also focuses on the Role of IRDA as governing body
and it has taken overview of the insurance companies and their advertising efforts on the
insurance sector.

Arvind Kumar Singh, (2014) studied the current scenario of insurance sector has been taken
up. At present the market is moving rapidly and aggressively. There is competition and force
to more ahead. The features of this expansion strategy is hunting for new business looking up
for potential and grabbing it.

Aditya Nath Jha, (2014) studied proper analysis of various distribution channels in insurance
industry in India has been done. Before privatization only individual insurance agent was
allowed to sell life Insurance. But After the IRDA Act, distribution channel further expanded.

Manoj Kumar Mishra, (2014) analyzed demand of life insurance. For this annual financial data
from the year 1970-71 upto 2009-10 has been considered. It is pointed out that factors like
income, inflation, interest rates, financial development, grows domestic savings and the rate of
growth of economy play vital role in creating the demand of insurance.

Supriya M. Lakhangaonkar, (2014) Opportunities and scope of online insurance market in India
has been elaborated and critically examined. Internationally and in developed countries, online
insurance sell is having very good share.

52
 CHAPTER 4 - DATA ANALYSIS AND INTERPRETATION

4.1 Data analysis of respondent

1 Current Age
o 20-30
o 31-40
o 41-50
o Above 50
Age Male Female Total
20 – 30 21 19 40
31 – 40 02 04 06
41 – 50 02 01 03
Above 50 01 - 01
Total 26 24 50

Table 4.1 Age of Respondents

Chart Title
25

20

15

10

0
20-30 31-40 41-50 Above 50

Male Female

Chart 4.1 Age of Respondents

Conclusion: According to the survey the respondents are classified into 3 age group i.e. 20-
30, 31-40, 40-50, above 51. In 20-30 ages group there are 21 males and 19 females. In 31-
40 ages group there are 2 males and 4 females. In 40-50 ages group there are 2 males and
1female. In above 50 ages group there is only 1 male respondent. So here it reflects that
maximum respondents are from 20 – 30 age group.
53
2. Gender

o Male
o Female

Particular Percentage
Male 50%
Female 50%
Total 100%

Table 4.2: Gender of respondents

Chart 4.2 Gender of respondent

Conclusion: According to the survey it reflects that out of 100 % respondent, 50% respondents
(i.e.25 out of 50) are from Gender group of Male. And 50% respondents (i.e. 25 out of 50) are
from gender group of Female. So here both male, female respondents are equal.

54
3. Marital Status

o Married
o Unmarried

Particular Percentage
Married 24.5%
Unmarried 75.5%
Total 100%

Table 4.3 Marital Status of Respondent

Chart 4.3 Marital Status of Respondent

Conclusion: According to the survey out of 100% respondent, 25% respondent (i.e. 12 out of
49) are Married and 75% respondent (i.e.37 out of 49) are Unmarried. It means majority of
respondent are unmarried.

55
4. Qualification:

o SSC
o HSC
o Graduate
o Post Graduate

Particular Percentages
SSC 14%
HSC 20%
Graduate 50%
Post Graduate 16%
Total 100%
Table 4.4 Qualification of Respondents

Chart 4.4 Qualification of Respondents

Conclusion: According to the survey out of 100% respondent,14% (i.e. 7 out of 50) are SSC
passed. And 20% (i.e. 10 out of 50) are HSC passed. 50% respondent (25 out of 50) are
Graduate and 16% (i.e. 8 out of 50) respondents are Post Graduate. That means majority of
respondents are Graduate.

56
5. Occupation

o Business
o Student
o Service
o Other

Particular Percentages
Business 2%
Student 48%
Service 38%
Other 12%
Total 100%
Table 4.5: Occupation of Respondents

Chart 4.5: Occupation of Respondents

Conclusion: According to the survey out of 100%. 2% (i.e. 1 out of 50) of respondent is from
business profile.48% (i.e. 24 out of 50) of respondent are students and 38% (i.e. 19 out of 50)
are from service profile. And 12% (i.e. 6 out of 50) are comes under another category. Majority
of respondent are students.

57
6. Nowadays being Insured is necessary?

o Yes
o No

Particular Percentages
Yes 85.7%
No 14.3%
Total 100%
Table 4.6: Being Insured is necessary or not

Chart 4.6: Being insured is necessary or not

Conclusion: According to the research 85.7% (i.e.42 out of 49) respondents thought that
nowadays being insured is necessary and from the point of view of other 14.6% (i.e. 6 out of
49) respondents being insured is not necessary. That means 85.7 % respondents know about
importance of being insured.

58
7. If Yes, are you Insured?

o Yes
o No

Particular Percentages
Yes 77.6%
No 22.4%
Total 100%

Table 4.7: Respondents are insured or not

Chart 4.7: Respondents are insured or not

Conclusion: According to the survey there are 77.6% (i.e.38 out of 49) respondents insured.
Were as 22.4 % (i.e.11 out of 49) respondents are not insured with any insurance policy. That
means 77.6 know how much insurance is important but remaining 22.4% doesn’t aware about
insurance policy.

59
8. From which Insurance Company you are Insured

o Life Insurance Corporation in India

o ICICI Prudential Life Insurance
o HDFC Standard Life Insurance
o Any other

Particular Percentage

Life Insurance Corporation in India 49%

ICICI Prudential Life Insurance 4.1%
HDFC Standard Life Insurance 6.1%
Any other 40.8%
Total 100%
Table 4.7: Companies from respondents are insured.

Chart 4.7: Companies from respondents are insured

Conclusion: According to the survey 40.8% (i.e. 24 out of 49) respondents are insured from
Life Insurance Corporation in India company and 4.1% (i.e.2 out of 49) respondents are insured
from ICICI Prudential Life Insurance company. And other respondents are from HDFC
Standard Life Insurance with 6.1% (i.e.3 out of 49). Were as remaining respondents being from
other category with 49% (i.e. 20 out of 49) respondents. That means majority of respondents
secured their life with Life Insurance Corporation in India. It is one of the popular insurance
company among all companies.

60
9. Have you heard about Insurance Broker?

o Yes
o No

Particular Percentage
Yes 73.5%
No 26.5%
Total 100%
Table 4.9: Respondents heard about Insurance Broker.

Chart 4.9: Respondents heard about Insurance Broker.

Conclusion: According to the research there are 73.5% (i.e. 36 out of 49) respondents aware
about Insurance broker. Were as other 26.5% (i.e. 13 out of 49) respondents are not aware about
the insurance broker. Means here majority of respondents are known about the insurance broker

61
10. Buying Insurance Policy from Insurance Broker is beneficial?

o Yes
o No

Particular Percentage
Yes 79.6%
No 20.4%
Total 100%
Table 4.10: Buying Insurance Policy from Insurance Broker is beneficial

Chart 4.10: Buying Insurance Policy from Insurance Broker is beneficial.

Conclusion: According to the survey 79.6% (i.e. 39 out of 49) respondents’ point of view buying
insurance policy from insurance broker is beneficial. Were as 20.4% (10 out of 49) respondents said it
is not beneficial for them to buy insurance policy from broker. That means maximum respondents know
the importance of buying insurance policy from broker.

62
11. Where did you find your insurance broker?

o The internet
o Social media
o Advertisements
o Insurance rating agencies
o Recommendation
o Insurance brokers
o Other
Particular Percentage
The Internet 8.3%
Social media 8.3 %
Advertisement 4.2%
Insurance rating agencies 12.5%
Recommendation 25%
Other 41.7%
Total 100%
Table 4.11: Respondents finds their insurance broker.

Percentage
120.00%
100.00%
80.00%
60.00%
40.00%
20.00%
0.00%

Chart 4.11: Respondents finds their insurance broker.

Conclusion: From the above table 4.11 and chart 4.11 it reflects that 8.3% (i.e. 4 out of 48)
respondents find their broker on Internet. And 8.3% of respondents have selected Social media
option were as 4.2% (i.e. 2 out of 48) are from Advertisement category and other 12.5%
respondents find their insurance broker from Insurance rating agencies. On recommendation of
family members, Friends 25% (i.e. 12 out of 48) respondents find their insurance broker. And
remaining 41.7% are from neutral category. So here majority of answers are from Neutral
category.
63
12. Your Broker is helpful and knowledgeable?

o Yes
o No

Particular Percentage
Yes 91.7%
No 8.3%
Total 100%
Table 4.12: Respondents broker is helpful and knowledgeable.

Chart 4.12: Respondents broker is helpful and knowledgeable.

Conclusion: According to the survey brokers of 91.7% (i.e.44 out of 48) respondents are helpful
and knowledgeable were as remaining 8.3% (i.e.4 out of 48) respondents’ brokers are not
helpful and knowledgeable. So here most of respondent’s brokers are helpful and
knowledgeable.

64
13. How satisfied are you with your current insurance broker?

o Extremely satisfy
o Somewhat satisfied
o Neutral
o Somewhat dissatisfied
o Extremely dissatisfied.

Particular Percentage
Extremely satisfy 26.5%
Somewhat satisfied 26.5%
Neutral 44.9%
Somewhat dissatisfied 0%
Extremely dissatisfied 2%
Total 100%
Table 4.13: Respondents satisfaction about their current insurance broker.

Chart 4.13: Respondents satisfaction about their current insurance broker.

Conclusion : The above table 4.13 and chart 4.13 shows that how much respondents are satisfied
with their current insurance broker 26.5% (i.e. 13 out of 49) of respondents are extremely
satisfied with their current insurance broker and 26.5% (i.e. 13 out of 49) respondents are
somewhat satisfied with their insurance broker were as 44.9% (i.e. 22 out of 49) respondents
are from neutral category. And remaining 2% (i.e. 1 out of 49) respondent is not satisfied with
insurance broker. So, here majority answers of respondents are Neutral.

65
14. The agent is responsive and professional?

o Yes
o No

Particular Percentage

Yes 88%
No 12%
Total 100%
Table 4.14: Respondents agent is responsive and professional

Chart 4.14: Respondents agent is responsive and professional.

Conclusion: According to the research 88% (i.e. 44 out of 50) respondents’ agents are
responsive and professional about their insurance policies claim process. Were as remaining
12% (i.e. 6 out of 50) respondents’ agents are not responsible and professional. So, here more
that 80% respondents are from yes category that means most of the agents are responsive and
professional.

66
15. Do you know about IRDA?

o Yes
o No

Particular Percentage

Yes 64.6%
No 35.4%
Total 100%
Table 4.15: Respondents are known about IRDA or not

Chart 4.15: Respondents are known about IRDA or not

Conclusion: According to the survey 64.6% (i.e.31 out of 48) respondents are aware about
IRDA were 35.4% (i.e.17 out of 48) respondents are not aware about IRDA. That means
maximum respondents know about IRDA.

67
16. Is Insurance Broker and Insurance Agent being one and same?

o Yes
o No

Particular Percentage
Yes 22.9%
No 22.9%
May be 54.2%
Total 100%
Table 4.16: Insurance broker and Insurance Agent being one and same or not

Percentage
120.00%

100.00%

80.00%

60.00%

40.00%

20.00%

0.00%
Yes No May be Total

Chart 4.16: Insurance broker and Insurance Agent being one and same or not.

Conclusion: Above table 4.16 and chart 4.16 shows that 22.9% (i.e. 11 out of 48) respondents
are from yes category were as 22.9% (i.e.11 out of 48) are from No category and remining
54.2% (i.e. 26 out of 48) respondents are not sure about insurance broker and insurance agent
being one and same. It reflects that maximum respondents are still confused between insurance
broker and insurance agent.

68
17. How likely would you recommend your insurance broker to your friends, family and
colleagues?

o Likely
o Neutral
o Unlikely

Particular Percentage
Likely 40.8%
Neutral 55.1%
Unlikely 4.1%
Total 100%
Table 4.17 How respondents recommend their insurance broker.

Chart 4.17: How respondents recommend their insurance broker.

Conclusion: Above table 4.17 and chart 4.17 shows that 40.8% (i.e.20 out of 49) respondents
are strongly agreed to recommend their insurance broker to their friends, family and colleagues.
And 55.1% (i.e.27 out of 49) are selected neutral category were as remaining 4.1% (i.e. 2 out
of 49) are not agreed to recommend their insurance broker. So here majority of answers come
from neutral category.

69
18. Technological changes in Insurance directly affect Broker’s Role?

o Yes
o No
o May be

Particular Percentage
Yes 52.1%
No 20.8%
May be 27.1%
Total 100%
Table 4.18: Technological changes in insurance directly affect brokers role or not.

Chart 4.18: Technological changes in insurance directly affect brokers role or not.

Conclusion: According to the research 52.1% (i.e.25 out of 48) respondents yes category and
20.8% (i.e.10 out of 48) respondents are from no category and 27.1% (i.e.13 out of 48) are from
may be category means they still confused. Here majority of answer is yes. So, from
respondents’ point of view technological changes in insurance will directly affect brokers role.

70
19. Do you know detail about Broker’s Commission [Fees]?

o Yes
o No

Particular Percentage
Yes 60%
No 39.6%
Total 100%
Table 4.19: Respondents know about brokers commission [Fees]

Chart 4.19: Respondents know about brokers commission [Fees]

Conclusion: As per the above table 4.19 and Chart 4.19 there are 60.4% (i.e.29 out of 48)
respondents aware about brokers commission [Fees] and 39.6% (i.e.19 out of 48) respondents
are not aware about brokers commission [Fees]. So here we can conclude that maximum of
respondents is aware about brokers commission.

71
20. Were you kept informed by Broker during the claim process?

o Yes
o No

Particular Percentage
Yes 77.1%
No 22.9%
Total 100%
Table 4.20 Respondents kept informed by broker during the claim process.

Chart 4.20 Respondents kept informed by broker during the claim process.

Conclusion: As per the table 4.20 and chart 4.20 it reflects that 77.1% (i.e.37 out of 48)
respondents brokers kept informed them during claim process were as remaining 22.9% (i.e.11
out of 48) respondents’ brokers are not informed them during the claim process. So that we can
conclude that majority of those respondents which are kept informed y broker during the claim
process.

72
21. Rate your experience of using Insurance Broker?

o Excellent
o Satisfactory
o Neutral
o Unsatisfied
o Satisfactory
Particular Percentage
Excellent 14.3%
Satisfactory 34.7%
Neutral 42.9%
Unsatisfied 4.1%
Satisfactory 4.1%
Total 100%
Table 4.21 Respondents experience of using Insurance Broker.

Percentage
120.00%

100.00%

80.00%

60.00%

40.00%

20.00%

0.00%

Excellent Satisfactory Neutral Unsatisfied Satisfactory Total

Chart 4.21 Respondents experience of using Insurance Broker.

Conclusion: As per the above diagram 14.3(i.e. 7 out of 49) respondents have excellent
experience of using insurance broker. And 34.7% (i.e. 17 out of 49) respondents are satisfied
with their insurance broker were as 42.9% (i.e. 21 out of 49) of respondents are from neutral
category. And 4.1% (i.e. 2 out of 49) respondents are not satisfied with their current insurance
broker and remaining 4.1% (i.e. 2 out of 49) respondents are from satisfactory category. So here
majority of respondents are neutral with their experience.
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 CHAPTER 5
SUMMARY OF FINDING, SUGGESTION AND CONCLUSION

In India, the transformation of the insurance industry from a public monopoly to a competitive
environment, presents very interesting challenges to the new players and to the customer. This
gives an opportunity to the new players to test for their various hypotheses and apply the
knowledge gained from overseas markets. From the customer’s point of view, they will choose
an insurer or a provider according to their requirement. The biggest beneficiary of the incoming
competition in insurance markets will be the Indian customers. Thus, the entry of private
companies in the insurance market, facilitate the customers to choose an insurance policy and
their claims and settlement will easy and customer friendly.
The review of literature includes the awareness, satisfaction, perception and expectation
of Brokers towards their customer, role of insurance agents/officials, factors influencing the
policyholder to select and buy a product from an insurance company, premium rate and brand
name of the insurers, impact of LPG in insurance sector and finally the research have concluded
with the analysis of comparison of public and private insurance companies

5.1 FINDING OF STUDY

It found that 64.6% respondents are aware about IRDA and respondents are still 35.4% are still
not aware about IRDA.
According to the survey 91.7% insurance brokers are helpful and knowledgeable were as 8.3%
respondents’ brokers are not knowledgeable and helpful.
According to the survey it reflects that 85.7% respondents’ point of view being insured is
necessary and remaining 14.3% respondents’ point of view being insured is not necessary.
It found that 22.9% respondents thought Insurance broker and Insurance agent are one and same
were as 22.9% respondents thought Insurance broker and agent are different and remaining
54.2% respondents are still confused between Insurance broker and agent.

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5.2 Suggestion

To Customer

Customer should select professional and responsive broker while taking insurance.

Customer should choice right insurance policy at a right time.

According to the survey many of respondents are not aware about the IRDA. Every customer
should know about IRDA and its rules and regulations

To Brokers

Broker should give appropriate information to their customer regarding insurance policies
according to their need and benefits

Brokers should kept inform their customers during claim process.

5.3 Conclusion
This article analyses the role and position of insurance brokers as part of the insurance market
This analysis shows that the conditions under which insurance brokers worked since the year
2019 became stricter because of improvement of professional qualities of insurance brokers.
The analysis also demonstrates that the law lays greater emphasis on the work of insurance
salesmen as a subject on the highest professional level. Brand new law that applies solely to
insurance brokers and adjustors represents stricter conditions in general in fulfilment of dealer
activities. This fact also caused the decrease in the numbers of registered insurance salesmen.

5.4 Weakness

Traditional distribution channels, especially tied agents, need to improve to match the new
product offerings. 146 There is general lack of transparency as financial and operational data
for insurers are not readily available as none of India’s insurers are directly listed on stock
exchanges.

Like all developing economies on a fast track, the shortage of trained insurance professionals
and technicians at all levels cannot be remedied in the short term.

Natural catastrophes will always be present; the Indian sub-continent is vulnerable to cyclones,
floods, hurricanes and earthquakes, and until there is a national capacity (similar to the terrorism
pool) to manage losses, dependence on overseas reinsurers will continue.

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 BIBILIOGRAPHY

http://www.financialized.com/Insurance/roles-and-expertise-of-insurance-brokers
http://understandinsurance.com.au/using-an-insurance-broker
https://ibau.ug/about-us/roles-duties-of-insurance-brokers/
https://www.insureon.com/insurance-glossary/insurance-agent-broker
http://www.policyholder.gov.in/Insurance_Brokers.aspx
https://en.wikipedia.org/wiki/Insurance_broker
https://resources.workable.com/insurance-broker-job-description

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 QUESTIONNAIRE

• Name –

• Age -
a. 20 - 30 b. 31 – 40
c. 41 – 50 d. Above 50
• Gender -
a. Male b. Female
• Marital Status -
a. Married b. Unmarried
• Qualification –

• Occupation –

a. Business c. Profession

b. Service d. Government Job

1) Nowadays being Insured is necessary?

a. Yes b. No

2) If Yes, are you Insured?

a. Yes b. No

3) From which Insurance Company you are Insured?

a. Life Insurance Corporation in India c. HDFC Standard Life Insurance

b. ICICI Prudential Life Insurance d. Any other ………………………

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4) Have you heard about Insurance Broker?

a. Yes b. No

5) Buying Insurance Policy from Insurance Broker is beneficial?

a. Yes b. No

6) Where did you find your insurance broker?

a. The internet b. Social media c. Advertisements

d. Insurance rating agencies e. Recommendation f. Insurance brokers g. Other

7) Your Broker is helpful and knowledgeable?

a. Yes b. No

8) How satisfied are you with your current insurance broker?

a. Extremely satisfy b. Somewhat satisfied c. Neutral

d. Somewhat dissatisfied e. Extremely dissatisfied.

9) The agent is responsive and professional?

a. Yes b. No

10) Do you know about IRDA?

a. Yes b. No

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11) Is Insurance Broker and Insurance Agent being one and same?

a. Yes b. No

12) How likely would you recommend your insurance broker to your friends, family and
colleagues?

a. Extremely unlikely b. Unlikely c. Neutral

d. Likely d. Extremely likely

13) Technological changes in Insurance directly affect Broker’s Role?

a. Yes b. No

14) Do you know detail about Broker’s Commission [Fees]?

a. Yes b. No

15) Were you kept informed by Broker during the claim process?

a. Yes b. No

16) Rate your experience of using Insurance Broker?

a. Excellent b. Satisfied

c. Neutral d. Unsatisfied.

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