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Insurance is a means of protection against financial loss. It is basically a contractual agreement in which, in exchange for a fee, one party agrees to compensate another party if a specific loss, damage or injury occurs. The insurance sector involves various entities such as insurers, insurance brokers, insurance surveyors, corporate insurance agents and reinsurers. But who exactly are they and what do they do? In this blog post, we will explain each of these terms one by one.
Whether you are planning to purchase an insurance policy or build a career or business in the insurance industry, we recommend you to go through this guide. Here, we will help you understand some of the most basic insurance terms that everyone should know.
Below, we have explained the common terms used in the insurance industry:-
An insurer is another word for an insurance company. It is an entity that accepts the risk of the insured (the insurance policyholder) and promises to compensate them for losses that arise during the policy term. The insurer agrees to cover such losses in exchange for premiums paid by the insured on a regular basis.
An insurer can be a life insurance company or a general/non-life company. A life insurer is a company that provides coverage for life-related risks like death or survival. On the other hand, a general/non-life insurer is a company that provides coverage for risks other than life, such as health, motor, marine, fire, property and travel insurance.
According to the Insurance Regulatory and Development Authority of India (IRDAI) regulations, insurance companies must be registered with the authority separately for life insurance and non-life insurance. This means that the IRDAI license for a life insurer is different from the one meant for a general insurer. Leading life insurers in India are Life Insurance Corporation of India, HDFC Life, SBI Life, ICICI Prudential and Max Life.
The leading non-life insurers in the country are United India Insurance Co. Ltd., ICICI Lombard General Insurance Co. Ltd., Bajaj Allianz General Insurance Co. Ltd., HDFC ERGO General Insurance Co. Ltd and Tata-AIG General Insurance Co. Ltd.
An insurance broker is an intermediary who collaborates with multiple insurers to offer suitable insurance plans to clients. Unlike an individual insurance agent, who generally represents a specific insurer, a broker is independent and does not have exclusive ties with any particular insurance company. Brokers are expected to act in the best interests of their clients. They help them in selecting policies that meet their requirements as well as their budget.
They provide professional advice, compare insurance policies/plans across various insurers and even assist throughout the policy process. In return, they earn a brokerage fee or commission that is paid by the insurer. However, sometimes, the brokers also charge a fee from the clients. Without IRDAI’s approval, an entity cannot function as an insurance broker. This approval is issued by the authority in the form of an insurance broker license.
An insurance surveyor and loss assessor is an insurance intermediary licensed by the IRDAI to investigate, quantify and validate insurance claims. They assess the extent of damage to the asset and the cause of loss.
Based on this, they submit reports to the insurers to ensure the claims are fair and accurate. The surveyors may also offer advice on how to minimize the loss and prevent further damage to the property.
A corporate insurance agent is an entity that is authorized by the IRDAI to sell, solicit and service insurance policies from authorized insurers. They can collaborate with up to three insurers for each category (Life, General and Health) to offer various insurance products. It is important to note that a corporate insurance agent is not the same as an individual insurance agent.
A corporate insurance agent is a company or bank that is licensed to distribute insurance products of one or more insurers via employees/specified persons. An individual insurance agent is a single person who generally solicits and procures insurance business on behalf of a specific insurer. To provide the services as a corporate insurance agent, it is mandatory to have an IRDAI corporate agent license.
Did you know that even insurance companies require insurance? The insurance to an insurance company is provided by a reinsurer or a reinsurance company. Basically, a reinsurer protects primary insurance companies financially by taking on some of their risk in return for a premium.
For the insurers, reinsurance serves as a safety net. According to IRDAI’s official website, reinsurers in India are Valueattics Reinsurance Limited and General Insurance Corporation of India.
In the insurance world, insurers, insurance brokers, insurance surveyors and loss assessors, corporate insurance agents and reinsurers play a crucial role. The insurers protect the policyholders from the financial impact of unforeseen and uncertain losses in exchange for regular premiums. The brokers tie up with multiple insurers and help clients in selecting the most suitable insurance policies. In exchange, they earn brokerage fees or commission from the insurer, and in some cases, they may charge a fee from the client as well.
Insurance surveyors and loss assessors help insurers in assessing the extent of damage and in facilitating claim settlement. Reinsurers provide insurance to insurance companies by sharing or a portion of their risk. So, we can say that all of them are important stakeholders in the insurance ecosystem.
Planning to start an insurance business and need assistance in obtaining a certificate of registration from the IRDAI? Get in touch with our consultants at Registrationwala for professional guidance and comprehensive assistance in the registration process.
Q1. What is reinsurance?
A. Reinsurance means an insurance purchased by an insurer to transfer part of their risk to the reinsurer.
Q2. How many insurers can a corporate agent collaborate with?
A. A corporate insurance agency can collaborate with up to three insurers for each category (Life, General and Health).
Q3. What is the difference between insurer and insured?
A. Insurer refers to the insurance company. Insured refers to the individual who has purchased a policy from the insurer.
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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.
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