Insurance Brokers

Credit insurance is a complicated product that should not be purchased without doing some research to see what kind of policies are available, and what the differences are between and among the policies, and which policies seem to offer the best "fit" for the creditor company.

There are basically two kinds of representatives in the insurance business: Brokers and Exclusive Agents. They differ primarily by the number of insurance companies they represent. Exclusive agents only offer one insurer's products. Insurance brokers write coverage for more than one insurance company, and brokers are not employees of any insurance company. There are a number of advantages to using an insurance broker rather than contacting credit insurance carriers yourself or using an exclusive agent including these:

• Brokers are not restricted to dealing with one or a limited number of insurance companies… they are independent agents. Brokers will research a variety of insurance companies before recommending one or more which seem to best meet your needs.
  
• Brokers have in-depth knowledge of the financial strength and the reputation of the various insurance companies they work with.
  
• Brokers represent your interests. An insurance broker's primary duty is to his or her client, not to the insurance carrier.
  
• Brokers are experts on credit insurance coverage. Credit managers normally are not. Brokers can recommend specific policies, different types of coverage, and different options to better meet your needs. saving credit managers and their employers time and money. Brokers have experience in finding the best combination of coverage, price, terms and service for their clients.
  
• Brokers offer more than just a quote on credit insurance coverage; they provides expert, impartial advice before, during and after the sale.
  
• Brokers fees are normally paid by the insurance company. More precisely, most brokers´ services are free to the buyer. (Hint: Find out who pays the broker's fee before signing anything.)
  
• Brokers provide a variety of after-sales services including acting as intermediaries or mediators if and when a claim is filed assuming their client does not receive the level of service the client deserves. It is in their interest to do so, since brokers typically receive a commission from the insurance company each time the policy renews.
  

It is best to select a broker who takes the time to understand your company's goals and expectations relating to credit insurance. In the long term, this is far more important than buying a policy that offers the lowest premiums. If possible, use a broker with experience in your industry. They are more likely to have relationships with credit insurers familiar with your line of business and its unique challenges.

Source: "Credit and Collection Manager's Manual" edited by Michael Dennis and Steven Kozack.