Insurance BrokersAn insurance broker acts as an intermediary between the client and the insurance company. In this role, the broker serves as an advocate for the client in contracting with a particular professional liability insurance company. A broker may maintain relationships with a variety of insurance companies but is not employed by any of them. In dealing with insurance companies, the broker keeps the client's interests top of mind, making the process as streamlined as possible for the client. The broker advocates on behalf of the client to help them achieve the appropriate coverage for their needs and within their budget. Some brokers assist clients with filing claims as well.
Third-Party Administrators (TPAs)A TPA is employed by an insurance company, typically to assist with risk management and the handling of claims. In the wake of the recession, many insurance companies were forced to cut back on their staff levels, and claims and risk management were some of the hardest hit. Rather than employing more staffers, many insurance companies turned to TPAs to help expedite their claims processing efforts. TPAs usually have expertise in one or more areas, like professional liability insurance, enabling them to process claims in an efficient and expedient manner, freeing up the insurance company to focus its efforts in other areas, rather than on claims.
Managing General Agencies (MGAs)An MGA is similar to an insurance broker but is a bit more specialized. The MGA is granted underwriting power by an insurance company, whereas regular brokers do not have this privilege. Thus, an MGA has more power than a broker and can even assign new agents or brokers in retail insurance offices.
MGAs typically specialize in particular areas of insurance, like professional liability insurance. This takes the pressure off the insurance company to need to have on staff an expert in each type of insurance they offer or to have to spend time and money to train someone new. Instead, they contract with an MGA to handle more obscure areas of insurance.
Benefits of These RolesSome companies are able to act in all of these roles in different scenarios. For your insurance business, it can be a great help to employ these services. Insurance is a somewhat complex topic with a lot of nuance and detail, so it helps to have people who understand these nuances and specialize in certain areas. Rather than having to learn every little detail yourself, you can free yourself up to focus on other areas of running your business, leaving it to the experts to handle more detailed tasks.
It is important to understand exactly what each of these entities offers before getting into a contract with one or all of them. Ask plenty of questions to get a better understanding of what they can and cannot offer you and your business. Make sure that you fully understand what the scope and limits of their responsibilities will be, as this can vary from case to case. It is important to do ample research in advance to ensure that you have the full picture. This will better enable you to make an educated decision about what is right for your business and your needs.
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