Insurance broker

What it means

An insurance broker acts on the client’s side: collecting quotes from several insurers, comparing conditions and putting together the policy. The commission, however, is paid by the insurer out of the premium, not by the client.

A broker is neither a tied agent of one insurer nor a fee-paid adviser. Financial intermediaries are entered in a register kept by the National Bank of Slovakia and must carry their own professional indemnity cover for bad advice.

The client appoints a broker by contract or power of attorney, which sets what the broker may do on the client’s behalf: request quotes, sign, report losses. The service is not free, its price is simply hidden in the premium, so it is fair to ask what commission a given policy pays the broker and how that shaped the recommendation.

How it works in practice

For company cover a broker maps the risks and lays the quotes side by side, where the difference is rarely the price alone: it is the exclusions, the limits and the excess. Two products that look alike can cover quite different events.

The other half of the job starts with a loss: reporting it, dealing with the adjuster, pushing on deadlines. At renewal the broker checks that the sums insured still match the value of the assets and that underinsurance is not building up.

In the annual cost overview we give the client total premiums by policy and insurer. At renewal the broker can see from it what the company pays overall and may propose folding scattered policies, such as property insurance and liability, into one programme with a single anniversary.

What to watch out for

The policy gets signed on the broker’s word, unread. If the insurer then refuses because a required electrical inspection was missing, nobody covers the loss: a broker answers only for bad advice you can prove in writing.

When a company moves to another broker, the old mandate has to be ended in writing and the insurers told. Otherwise the insurer keeps talking to the previous broker, requests for documents in the claims handling never reach the company and deadlines pass without its knowledge.