Reinsurance broker: Difference between revisions
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'''Reinsurance broker''' is a person or a [[company]] who arrange reinsurance contracts between the direct insurer and the reinsurer in business. He is not contractually linked with only one [[client]]<ref> Schwepcke A. (2004), p.92</ref>. Apart from making transaction, he is engaded in administration, related claims [[negotiation]] and collection of these contracts<ref>Wang W. (2003), p.81</ref>. Depending on his own expertise and [[knowledge]] of [[market]] opportunity, he advises clients when it comes to choosing superior type of reinsurance programme, appropriate maintenance and acceptable capacity. Thereafter he establishes resultant programme with protected markets at competitive conditions and prices<ref>Carter R.L. (2013), p.49</ref>. The activities of the reinsurance broker are different in each country<ref>Wang W. (2003), p.81</ref>. | '''Reinsurance broker''' is a person or a [[company]] who arrange reinsurance contracts between the direct insurer and the reinsurer in business. He is not contractually linked with only one [[client]]<ref> Schwepcke A. (2004), p.92</ref>. Apart from making transaction, he is engaded in administration, related claims [[negotiation]] and collection of these contracts<ref>Wang W. (2003), p.81</ref>. Depending on his own expertise and [[knowledge]] of [[market]] opportunity, he advises clients when it comes to choosing superior type of reinsurance programme, appropriate maintenance and acceptable capacity. Thereafter he establishes resultant programme with protected markets at competitive conditions and prices<ref>Carter R.L. (2013), p.49</ref>. The activities of the reinsurance broker are different in each country<ref>Wang W. (2003), p.81</ref>. | ||
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'''Functions during the term of the contract''': [[consulting]] and advising, drafting new contracts, contract [[management]], collecting payments and accounting, [[controlling]] of claims. | '''Functions during the term of the contract''': [[consulting]] and advising, drafting new contracts, contract [[management]], collecting payments and accounting, [[controlling]] of claims. | ||
'''Functions after and in the end of the contract''': compliting liabilities, closing claims. | '''Functions after and in the end of the contract''': compliting liabilities, closing claims. | ||
'''Safeguarding of the interest''': being on time, following clients interests, binding authority<ref> Schwepcke A. (2004), p.93-94</ref>. | '''Safeguarding of the [[interest]]''': being on time, following clients interests, binding authority<ref> Schwepcke A. (2004), p.93-94</ref>. | ||
==Examples of Reinsurance broker== | ==Examples of Reinsurance broker== | ||
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==Advantages of Reinsurance broker== | ==Advantages of Reinsurance broker== | ||
Reinsurance broker has several advantages that make it an attractive option for both insurers and reinsurers. These advantages include: | Reinsurance broker has several advantages that make it an attractive [[option]] for both insurers and reinsurers. These advantages include: | ||
* '''Expertise''': Reinsurance brokers possess extensive knowledge in the reinsurance [[industry]], enabling them to negotiate the best terms for their clients. They are well-versed in the various types of reinsurance products available and can provide valuable advice on which [[product]] is best suited for a particular situation. | * '''Expertise''': Reinsurance brokers possess extensive knowledge in the reinsurance [[industry]], enabling them to negotiate the best terms for their clients. They are well-versed in the various types of reinsurance products available and can provide valuable advice on which [[product]] is best suited for a particular situation. | ||
* '''Access to a wide range of reinsurers''': Reinsurance brokers have access to a wide range of reinsurers from all over the world, enabling them to find the best deal for their clients. | * '''Access to a wide range of reinsurers''': Reinsurance brokers have access to a wide range of reinsurers from all over the world, enabling them to find the best deal for their clients. | ||
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* '''Risk Management Consulting''': This involves providing advice to direct insurers and reinsurers on how to effectively manage their risks. This can include advice on areas such as reserving, [[capital management]], and product design. | * '''Risk Management Consulting''': This involves providing advice to direct insurers and reinsurers on how to effectively manage their risks. This can include advice on areas such as reserving, [[capital management]], and product design. | ||
* '''Claims Services''': Reinsurance brokers can provide assistance with the handling and processing of claims, including the negotiation of settlements with reinsurers. | * '''Claims Services''': Reinsurance brokers can provide assistance with the handling and processing of claims, including the negotiation of settlements with reinsurers. | ||
* '''Market Research''': Reinsurance brokers can provide market research services to direct insurers and reinsurers. This can include gathering and analyzing data on industry trends, market developments, and competitive dynamics. | * '''Market Research''': Reinsurance brokers can provide [[market research]] services to direct insurers and reinsurers. This can include gathering and analyzing data on industry trends, market developments, and competitive dynamics. | ||
* '''Regulatory Compliance and Advice''': Reinsurance brokers can advise direct insurers and reinsurers on regulatory requirements and compliance issues. This can include providing guidance on regulatory filings, issuing approvals, and obtaining licensing. | * '''Regulatory Compliance and Advice''': Reinsurance brokers can advise direct insurers and reinsurers on regulatory requirements and compliance issues. This can include providing guidance on regulatory filings, issuing approvals, and obtaining licensing. | ||
In summary, reinsurance brokers play an important role in the insurance industry by providing services to direct insurers and reinsurers, such as risk management consulting, claims services, market research, and regulatory compliance and advice. | In summary, reinsurance brokers play an important role in the insurance industry by providing services to direct insurers and reinsurers, such as risk management consulting, claims services, market research, and regulatory compliance and advice. | ||
==Footnotes== | ==Footnotes== | ||
<references /> | <references /> | ||
{{infobox5|list1={{i5link|a=[[Insurance intermediary]]}} — {{i5link|a=[[Sub broker]]}} — {{i5link|a=[[Mercantile agent]]}} — {{i5link|a=[[Agency Broker]]}} — {{i5link|a=[[Trade house]]}} — {{i5link|a=[[Organizational costs]]}} — {{i5link|a=[[Law firm]]}} — {{i5link|a=[[Loss adjustor]]}} — {{i5link|a=[[Industrial partner]]}} }} | |||
==References== | ==References== | ||
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{{a|Weronika Lisik}} | {{a|Weronika Lisik}} | ||
[[Category:Risk management]] | [[Category:Risk management]] | ||
Latest revision as of 03:36, 18 November 2023
Reinsurance broker is a person or a company who arrange reinsurance contracts between the direct insurer and the reinsurer in business. He is not contractually linked with only one client[1]. Apart from making transaction, he is engaded in administration, related claims negotiation and collection of these contracts[2]. Depending on his own expertise and knowledge of market opportunity, he advises clients when it comes to choosing superior type of reinsurance programme, appropriate maintenance and acceptable capacity. Thereafter he establishes resultant programme with protected markets at competitive conditions and prices[3]. The activities of the reinsurance broker are different in each country[4].
Definition of reinsurance
Reinsurance is hard to define. It is a form of insurance. Also described as "insuring insurance"[5]. According to dictionary "it is a contract by which an insurer procures a third party to insure it against loss or liability by reason of such original insurance"[6].
Legal issues
There are no particular statutory regulations. Contract between reinsurance and his principal is based on general law of agency. Legal issues regarding to the duty of reinsurance broker[7]:
- authority of the reinsurance broker such as sub-agent, dual agent, ostensible authority
- ability of adaptation reinsurance and matching security
- retraction of claims and storeage documents
- advisory
- duties relating to "defences wavier, estoppel, ratification, contributory negligence, concurrent liability in tort"
Functions and duties of the reinsurance broker
Functions before and at the time of signing of a contract: placing the risk, choosing the reinsurer, having all information about contract. Functions during the term of the contract: consulting and advising, drafting new contracts, contract management, collecting payments and accounting, controlling of claims. Functions after and in the end of the contract: compliting liabilities, closing claims. Safeguarding of the interest: being on time, following clients interests, binding authority[8].
Examples of Reinsurance broker
- Guy Carpenter: Guy Carpenter is a global leader in providing risk and reinsurance intermediary services. It is a subsidiary of Marsh & McLennan Companies and has offices in more than 50 countries, with a team of 7,000 professionals. It develops innovative solutions to meet the needs of its clients, particularly in the areas of risk management, capital and reinsurance.
- Willis Re: Willis Re is one of the world’s leading reinsurance brokers. It provides services in more than 150 countries and has over 4,000 professionals in its global network. It offers a wide range of services, including reinsurance, risk management, capital markets solutions and consulting.
- Aon Benfield: Aon Benfield is a leading global reinsurance intermediary and a provider of capital solutions and advisory services. It has offices in over 50 countries and has a team of over 10,000 professionals. It offers a wide range of services, including reinsurance placement, risk analysis, capital solutions and claims management.
- Marsh: Marsh is one of the world’s leading insurance broking and consulting firms. It provides services to businesses and individuals in more than 130 countries. Marsh’s reinsurance services include risk advisory, reinsurance placement, capital solutions and claims management.
Advantages of Reinsurance broker
Reinsurance broker has several advantages that make it an attractive option for both insurers and reinsurers. These advantages include:
- Expertise: Reinsurance brokers possess extensive knowledge in the reinsurance industry, enabling them to negotiate the best terms for their clients. They are well-versed in the various types of reinsurance products available and can provide valuable advice on which product is best suited for a particular situation.
- Access to a wide range of reinsurers: Reinsurance brokers have access to a wide range of reinsurers from all over the world, enabling them to find the best deal for their clients.
- Cost savings: Reinsurance brokers are able to reduce the cost of reinsurance for their clients by negotiating better terms with the reinsurers.
- Risk Management: Reinsurance brokers can provide valuable advice on how to manage risk and ensure that insurance policies are in compliance with applicable regulations.
- Flexibility: Reinsurance brokers are able to customize insurance policies to meet the specific needs of their clients.
Limitations of Reinsurance broker
Reinsurance brokers are limited in their ability to negotiate a contract on behalf of their clients. They are not legally authorized to bind a contract on behalf of their client, but they can facilitate the process. Additionally, they are limited to the capacity of the reinsurers they are working with, and may not have access to the best deals available in the market. Other limitations include:
- They are limited by the amount of money they can collect from the insured for the reinsurance premium.
- They cannot guarantee or promise a particular outcome, such as the amount of coverage or the terms of the reinsurance contract.
- They cannot provide legal advice or act on behalf of their clients in court or in arbitration.
- They cannot guarantee the accuracy or completeness of information provided by reinsurers.
- They are limited to the scope of their expertise and may not be able to provide advice on areas outside of their expertise.
Reinsurance brokers can also provide a number of other services which are beneficial to the direct insurers and reinsurers, including:
- Risk Management Consulting: This involves providing advice to direct insurers and reinsurers on how to effectively manage their risks. This can include advice on areas such as reserving, capital management, and product design.
- Claims Services: Reinsurance brokers can provide assistance with the handling and processing of claims, including the negotiation of settlements with reinsurers.
- Market Research: Reinsurance brokers can provide market research services to direct insurers and reinsurers. This can include gathering and analyzing data on industry trends, market developments, and competitive dynamics.
- Regulatory Compliance and Advice: Reinsurance brokers can advise direct insurers and reinsurers on regulatory requirements and compliance issues. This can include providing guidance on regulatory filings, issuing approvals, and obtaining licensing.
In summary, reinsurance brokers play an important role in the insurance industry by providing services to direct insurers and reinsurers, such as risk management consulting, claims services, market research, and regulatory compliance and advice.
Footnotes
| Reinsurance broker — recommended articles |
| Insurance intermediary — Sub broker — Mercantile agent — Agency Broker — Trade house — Organizational costs — Law firm — Loss adjustor — Industrial partner |
References
- Carter R.L. (2013), Reinsurance,Springer Science & Business Media
- Marcinko D. (2006), Dictionary of Health Insurance and Managed Care, Springer Publishing Company
- Merkin R. (2013), Guide to Reinsurance Law. Practical Insurance Guides, Taylor & Francis
- Neuthor L. (2013), Intermediation in Reinsurance Markets. Tom 67 z Münchener Reihe, VVW GmbH
- Schwepcke A. (2004), Reinsurance: Principles and State of the Art - A Guidebook for Home Learners, VVW GmbH
- Wang W. (2003), Reinsurance Regulation:A Contemporary and Comparative Study. Tom 25 z International Banking, Finance, Kluwer Law International B.V.
Author: Weronika Lisik
