Advantages and Disadvantages of Holding an Insurance Broker

Preface: This post was originally published in 2023 and has been updated on April 25, 2025, to provide you with the most current and accurate information.

The insurance broker is an individual or business entity that helps customers to choose the right policy. They must follow the obligations and rules set forth by IRDAI from time to time. From marketing to sale, the insurance broker must ensure compliance with the legal and regulatory requirements while conducting business.

If you are planning to purchase an insurance policy, and have been considering hiring an insurance broker for assistance, then check out this blog post. Here, we will explain the advantages and disadvantages of an insurance broker. Doing so will help you decide whether hiring an insurance broker would be a good idea or not!

What Does an Insurance Broker Do?

An insurance broker is a professional or entity that, on behalf of the insurance company, sells insurance policy to an individual. Basically, an insurance broker serves as an intermediary between the insured and the insurer. A broker’s primary aim is to satisfy the interests of their customers. As the insurance brokers have an in-depth knowledge of the insurance industry and possess an Insurance Broker license, they can guide their customers in an unbiased manner. 

Instead of partnering with a single insurance company like insurance agents do, the insurance brokers collaborate with several insurance companies to help their customers pick the best policies.

Advantages of Hiring an Insurance Broker

For individuals who plan to purchase a policy, hiring an insurance broker can have the following advantages:

• An insurance broker has a deep understanding regarding how the insurance industry works, latest trends, policies with best coverage, new types of insurance plans by various insurers, etc. An ordinary individual may not have this sort of knowledge, and thus, they can benefit from approaching the broker for information.

• If you want an insurance policy that is cheaper than other policies but offers better coverage, a broker can provide you with the best options available out there.

• They may help you understand all the terms and conditions pertaining to a specific policy.

• If you face any confusion regarding your policy, you can reach out to your broker to help you out. After all, a broker’s relationship doesn’t end after policy purchase. It remains throughout the validity of the policy. 

• If you are not satisfied with your existing policy, you can consult with your broker for a better policy.

• For filing a claim, you can seek your broker’s help. Since they know all the requirements for filing a claim, they can improve your chances of getting claim approval by the insurer.

• A broker offering insurance services can guide their customers regarding add-ons provided by different insurers like zero depreciation cover, engine protection, roadside assistance, return to invoice cover, and consumables cover.

Disadvantages of Hiring an Insurance Broker

All that glitters is not gold. Hiring an insurance broker has its own set of flaws and disadvantages:

• An insurance broker charges a fee for his services. So, when you purchase a policy through them, be prepared to pay the extra money. Depending on the broker’s experience and expertise, the fees may be higher.

• If the broker lacks experience, they are mostly likely to know less about the insurance sector as compared to a broker with years of experience.

• Not all brokers are affiliated with every insurance company, so they can only offer information about the policies they have access to. As a result, you might miss out on better options available elsewhere.

• Since their income depends on making sales, some brokers may occasionally prioritize closing a deal over providing the best service. That’s why it is important to ensure your broker is honest and provides you with a deal that works the best in your favour.

Conclusion

An insurance broker helps their clients to choose the best insurance policies. They partner with various insurers and help their customers decide the policies based on their coverage requirements, budget, etc. If you want to become an insurance broker in India, connect with Registrationwala’s IRDAI consultants. We will assist you to secure an IRDAI insurance license in a smooth and efficient manner. 

Frequently Asked Questions (FAQs)

Q1. Which authority monitors brokers providing insurance services?

A. Insurance Regulatory and Development Authority of India (IRDAI) monitors brokers providing insurance services in India.

Q2. Can I offer insurance broker services without IRDAI’s approval?

A. No, you cannot offer insurance broker’s services if you do not have IRDAI’s approval.

Q3. What is the difference between an insurance broker and an insurance agent?

A. Brokers collaborate with various insurers and offer a broad range of policy options. Insurance agents, on the other hand, generally represent a single insurer.

Q4. How can an insurance broker assist during the claims process?

A. An insurance broker can be extremely helpful throughout the claims procedure. They assist customers in understanding the terms and conditions of their policy, assist them in completing the required paperwork, and communicate with the insurance provider on their behalf. This assistance can raise the possibility that their claim will be successful. ​

Author: Dushyant Sharma

Hey there, I'm Dushyant Sharma. With the extensive knowledge I've gained in past 8 years, I have been creating content on various subjects such as banking, insurance, telecom, and all the important registration and licensing processes for various companies. I'm here to help everyone with my expertise in these areas through my articles.