Insurance
Brokers
An 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 Roles
Some 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.
All information provided in this blog is for informational purposes only. The sources used are presumed accurate. CalSurance Associates, Brown & Brown Program Insurance Services, Inc. and Brown & Brown, Inc. will not be liable for any errors, omissions, losses, injuries or damages arising from its display or use and will not assume responsibility for any misguided information. No guarantees are implied.
