Roles Of Registered Insurance Brokers In Insurance Value Chain
L-R: Vice President, Lagos Chambers of Commerce of Industry (LCCI), Mr. Gabriel Idahosa; Vice President, Nigerian Council of Registered Insurance Brokers (NCRIB), Mrs. Ekeoma Ezeibe; Deputy President, NCRIB Mr. Tunde Oguntade and President, NCRIB, Barr. Rotimi Edu, at the event.
There is a need for the insuring public to always consult the Registered Insurance Brokers when they want to take insurance policy, and it is also important to educate the public about the role of Brokers. In this article, EDET UDOH highlights the roles of brokers in the insurance industry.
Before talking about the Brokers, let’s first explain briefly what insurance is all about and how it works.
What Is Insurance?
Insurance is an arrangement by which an underwriting firm known as an insurance company undertakes to provide a guarantee of compensation for specified loss, damage, illness, or death in return for payment of a specified amount known as premium. It is true that the world is full of risks that pose threat to lives and properties.
Insurance is a contract, represented by a policy, in which an individual or entity receives financial protection or reimbursement against losses from an insurance company. The company pools clients’ risks to make payments more affordable for the insured.
How Insurance Works
Insurance Companies in Nigeria and around the world operate in the financial services sector – For example, an insurance company insures your vehicle against it being stolen or damaged by accident by replacing it or repairing it at no additional cost to you in exchange for the premium you must have paid upfront.
Although we have different types of professional bodies/intermediaries operating in the insurance industry, including the Underwriters, the Actuaries, the Brokers, and the Loss Adjusters, amongst others; but in this article, we will focus on the “Professional Insurance People” which is the insurance Brokers.
Who An Insurance Broker Is
Insurance Broker is one of the principal professionals in the insurance industry who act as intermediaries between the buyers of insurance policy and Insurance Companies.
The goal of an insurance Broker is to get the best coverage at the best price for clients, which involves a variety of activities on a day to day basis. Clients of Insurance Brokers may be individuals or corporate bodies. There are more than 500 insurance brokers operating within the nooks and crannies of Nigeria who are registered with the Nigerian Council of Registered Insurance Brokers (NCRIB).
The Nigerian Council of Registered Insurance Brokers (NCRIB) is the Umbrella Association of all Registered Insurance Brokers in Nigeria who are by law expected to be registered by it before they can be licensed to operate in the Nigerian Insurance market by the National Insurance Commission. The Council was established by an Act of the National Assembly (NCRIB Act No. 21 of 2003) which was signed into law by the then President and Commander-in-Chief of the Armed Forces of the Federal Republic of Nigeria, Chief Olusegun Obasanjo, GCFR on 4th July 2003.
Meanwhile, while speaking at the Special Insurance Day at the just concluded Lagos International Trade Fair held at the Tafawa Balewa Square (TBS) Lagos, the President NCRIB, Barr. Rotimi Edu said the Council is working assiduously to increase the number of brokers to at least one each in all the 774 local government areas in Nigeria.
Edu who expressed worrisome over the incessant issues of building collapse especially the most recent 21-Story building at Gerard Street which he said did not have insurance cover, called on the government and other relevant authorities to ensure enforcement of compulsory insurances.
While calling on Nigerians to patronize insurance brokers for their insurance need, Barr Edu dismissed the misconceptions that the insurance industry doesn’t pay claims, stating that the industry is paying genuine claims and that the issue of non-claim payment was in the past.
Edu who described insurance as the bedrock of every economy stated that NCRIB in collaboration with other stakeholders is working assiduously to increase insurance accessibility and acceptability through the enlightenment campaign.
Edu said the number of life insurance, vehicle insurance and property insurance policyholders in the country was very abysmal, adding that his administration was working to increase insurance visibility and acceptability.
He also advised the public not to take up insurance policy until “you have discussed and consulted with a Registered Insurance Brokers”
Speaking on the topic “Insurance From Brokers Perspective,” NCRIB Deputy President, Mr. Tunde Oguntade highlighted the roles of Registered Insurance Broker to include Risk Evaluation and Assessment; Advice Clients on Rights and Obligations; Personalised Insurance Services; Selection of Suitable Insurers; Prompt Payment of Claims; Annual Review of Clients Portfolio; periodic Presentation of Cover’s Summary; Tailor-Made Insurance Policy and Provision of Technical Expertise.
Risk Evaluation and Assessment
Mr. Oguntade said Brokers help their clients to outline risk management strategies, which are suitable for their profile, adding that an Insurance Broker is armed with professional skills, to assess risks and determine the likelihood of loss on an asset, loan, or investment.
According to him, assessing risk is essential for determining how worthwhile a specific investment is and the best process or processes to mitigate risk, stating further that based on risk evaluation and assessment, an Insurance Broker offers the best advice to his client on the best policy and the most suitable underwriting firm.
He said the service of an Insurance Broker is free to the clients.
Advise Clients on Rights and Obligations
According to Mr. Oguntade, Brokers act on behalf and in the interest of customers. They do comparison shopping to find the best deals and offer policies from more than one insurance company. They give advice to the insured on their rights and obligations under an insurance policy.
Personalised Insurance Services
“Rather than straight jacket insurance, Insurance Brokers consult and gather information for clients. This is important as to understand their specific needs in order to provide tailor-made insurance policies. They negotiate with insurance companies to be able to offer the best terms and premiums to clients. In addition, they help clients to mitigate risks and come up with working risk management strategies. They act as consultants to clients,” NCRIB Deputy President stated.
Selection of Suitable Insurers
Mr. Oguntade said “currently there are about 59 insurance companies in Nigeria, offering different policies with different levels of competence. An Insurance Broker understands the strength and weaknesses of all the insurance companies. One of the responsibilities of an Insurance Brokers is to recommend and advise clients on the choice of insurers or underwriters based on their strengths and weaknesses. They do comparison shopping to find the best deals and offer policies from more than one insurance company.”
Prompt Payment of Claims
He said based on his relationship with major underwriting firms and as a professional, it is easy and fast for Insurance Brokers to help clients to process and facilitate prompt payment of claims when the needs arise.
Claim, he said, is the end product of insurance policy and the main reason for insurance. It is part of a broker’s responsibility to ensure that clients get their claims promptly.
Annual Review of Clients Portfolio
NCRIB Deputy President said “Insurance requirements keep changing through different juncture in lives – changes in family composition, changes in income and expenses, changes in liabilities and assets, inflation, financial goals, amongst others.
“It is essential to intelligently design and review one’s insurance portfolio regularly. Insurance Brokers assists clients to review their annual insurance portfolio to suit their customers demand.”
Periodic Presentation of Cover’s Summary
“Insurance Brokers engage in periodic presentation of the summary of insurance cover to clients. They update existing clients of the latest development in the industry at renewal which form the basis for the decision,” Mr. Oguntade said.
Tailor-Made Insurance Policy
According to Mr. Oguntade, an Insurance Broker is a professional who offers, negotiates and sells policies. They do comparison shopping to find the best deals and offer policies from more than one insurance company. There are different types of risks, including natural disasters, car accidents, credit risks, cash flow problems, legal liabilities, and others. They often shop for the best combination of cover, tailored to meet the needs of clients at competitive rates.
Provision of Technical Expertise
He said “Insurance Brokers provide technical expertise on developments and innovations within the insurance market, fully guided by law. Insurance Brokers negotiate with the consult insurers and customers to develop and maintain relationships with different professionals. They also have business acumen, IT and administrative skills, as well as customer service skills.”
Also speaking on “The Duties of The Brokers in Insuring the Nation” at the Special Insurance Day at the just concluded Lagos International Trade, the NCRIB Vice President, Mrs. Ekeoma Ezeibe, said as Insurance Brokers their task is to ensure that the nation is insured.
She said it is also part of their duties to work with underwriters to provide insurance cover to all kinds of businesses to ensure sustainable business growth in the country.
Mrs. Ekeoma Ezeibe said in ensuring the insurance of the nation, Insurance Brokers work with government and relevant agencies to ensure the enforcement of the six compulsory insurances in Nigeria, namely: Builders Liability Insurance; Employers Liability Insurance; Moto Third Party Liability Insurance; Employers Liability Insurance (Group Life); Occupiers Liability Insurance and Healthcare professional Indemnity Insurance.
She said the main objective of compulsory insurance policies in Nigeria is to provide protection to Third Parties and the general public even as she called on Nigerians to embrace insurance in order to take of the unforeseen circumstances and unexpected losses.
