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Chapter 1 : Introduction
1.1 Introduction to insurance brokers and their operation
The insurance industry is one of the fastest-growing sectors in India and across the globe. With insurance products like Life, Health, Motor, and more, the industry figures speak volumes of the immense opportunities in the market. Indian Insurance sector saw a surge in the gross premium earned in recent years. However, the penetration of insurance in the country is only 3.7% of the gross domestic product. This indicates the need to address the challenges and promote growth. Eliminating intermediaries’ is the new buzz in market, but can you really do this especially while insuring yourself against individual or business risks? Some websites or apps can compare different policies and present you with options, but sometimes wisdom dawns late, especially when you need to make a claim. In this blog we will learn about Insurance Brokers, their role in representing you (the customer) while selling you the insurance products of different companies, how to find Insurance Brokers and the process of buying policies from them.
1.2 Who is an Insurance Broker?
Insurance Broker is one who offers you personalized or customized solutions for your (customer) insurance needs. Insurance Brokers are licensed entities to offer you policies from multiple insurance companies and hence, unlike insurance agents, they represent the customers and not companies. Insurance brokers also provide expert advice to customers regarding suitable insurance policies. They earn their brokerage from the company whose policy is selected/finalized by the customer. Insurance brokers also help customers in handling their claims. Insurance Brokers are accountable to their customers. In case any customer faces any discrepancies in the services offered by the Insurance Broker, they can report it directly to the Insurance Regulatory and Development Authority of India (IRDA). If proven, IRDA cancels the license issued to the broker.
1.3 What Is Insurance Broking Company?
Insurance Broking Company or firm usually represent corporations in their deal with insurance companies. Insurance Broking Companies can offer best and lower prices to their corporate clients along with specialized and customized services. Insurance Broking Company possess an insurance broking license. The chief officers of insurance broking companies are well-informed and expert professionals who are required to pass certain examinations.
1.4 Difference Between Insurance Agent and Broker
Insurance Agent represents a particular insurance company to sell its products to customers. They rely on the company for servicing demands of the customers and are less trained to understand the complex insurance products. Insurance agents are locally available and they can have a good personal bond with the customers. An insurance broker represents the buyer and offers them policies from different companies. The broker has to have a bachelor’s degree and undergo 50 hours of training to get the broking license from the authorities. Besides marketing of insurance products, they also offer claims consultancy and risk management services to their customers.
1.5 Insurance Broker Vs Insurance Company
Since an Insurance Broker represents buyers of insurance products or services, they are meant to serve the interest of customers. Insurance Agents, on the other hand, are employed or trained by insurance companies and hence they may not provide with the best solution suited for the customer. Hence in case of any violation of rules or a wilful misconduct by the Insurance Broker, the Insurance Broking Company is held liable instead of Insurance company. Whereas, in case of Insurance Agents, the Insurance Company is directly responsible for any misinformation.
1.6 Categories of Insurance Broker
Insurance Brokers are categorized according to the insurance products they buy, sell or advise to their customers. There are three categories of insurance brokers. Here are these 3 categories of insurance brokers:
o Direct broker Rs.25,000. o Re-insurance broker Rs.50,000. o Composite broker Rs.75,000. Apart from this, there are mandatory fees that has to be paid for the registration requirements: o Direct Broker- Rs. 50,000/- after granting of an in-principal approval where the application is new. In case of renewal of registration, the fees will be Rs 1,00,000/- for a period of 3 years. o Re-insurance Broker- Rs. 1,50,000/- after granting of an in-principal approval where the application is new. If there is a renewal of registration, then the fee to be paid for renewal is Rs. 3,00,000/- for 3 years. o Composite Broker- Rs .2,50,000/- after granting of an in-principal approval where the application is new. If there is a renewal of registration, then the fee to be paid for renewal is Rs. 5,00,000/- for 3 years. The fee payable as the mandatory fee would be for the validity period of the certificate of registration. Fees must be paid through electronic means or demand draft (DD) payable in favour of the Insurance Regulatory and Development Authority of India, Hyderabad. Clarification/ Further Information The applicant can be asked to furnish further information by the authority If required, the applicant has to submit these documents within 30 days from receiving the intimation from the authority.
1.8 Procedure for Issuing Insurance Broker License (registration)
If the authority feels that all the requisite information complies with the Insurance broker license, then an in-principal approval would be provided to the applicant for complying with the requirements related to the certificate of registration. The authority will grant the certificate if the applicant has complied with the laws and regulations. The certificate of registration as an Insurance Broker License would be given to the applicant when the applicant satisfies that the code of conduct would be adhered to. The broker applying for a certificate of registration can also apply for any other registrations under the IRDAI. Such other registration would only be granted to the applicant after issuing the certificate of registration for the first instance.
An applicant can make a new application if the certificate of registration has been cancelled/ repealed due to a change in law or held by a Securities Appellate Tribunal or any court of law. An application under this can only be made after one year to the concerned authority. Rejection An application for starting an insurance business can be rejected if the authority feels that the applicant has not fulfilled the necessary requirements. The authority must communicate the refusal to grant the application for an insurance broker license within 30 days of communication of the rejection. An applicant can make a new application after one year of rejection of the application.
1.9 Documents required for Insurance Broker License
Submission of relevant information as required in the Schedule I – Form B. Copy of the Memorandum of Association and Articles of Association should be according to the requirements of the Companies Act 2013. Remittance of the Fee for the particular category of Insurance broker licence. Training for the employees starting an insurance broker business Schedule-I Form F should have the relevant data of the principal officer. Fit and Proper certification, which is required as per Schedule-I Form G. Declaration submitted by a key management executive, principal officer, director of the company that they are not having any form of disqualification under the Act. Details of Directors/ Partners, Promoter and Key Management Personnel are to be provided in the Form. Schedule I- Form F- List of qualified persons responsible for managing and procuring brokerage business along with their qualifications. Details of statutory auditors and Principal Bankers along with the Bank Account Number of the applicant. Details of infrastructure, including IT infrastructure along with supporting evidence thereof like ownership or lease agreement evidencing that sufficient space is present for managing the brokering business.
insurance. Further, the dynamic and conducive regulatory landscape in the country is expected to propel industry growth in the coming years. The insurance broking channel of India has changed drastically over time. With the advancement in technology, changes in human interaction, and the sudden onset of a pandemic, insurers are trying to change the traditional face-to-face insurance distribution. But with a large population of India still believing in the importance of human interaction while buying a policy, the broker channel of insurance will still thrive for long. As the Indian insurance market continues to grow organically with increasing population and insurance requirements, there remains a massive opportunity for disruption through technology.
1.14 Challenges in the Insurance Broking Industry
The number of insurance brokers in the industry keeps increasing every year. But this role is still misunderstood and often not performed to its full potential. Few challenges that prevent the insurance broking industry from succeeding are: Lack of knowledge among people while buying insurance The concept of insurance has been highly misunderstood in India. The reasons for this are multiple- minimal guidance on the insurance policies, complex products, and high prices. According to the 2018 Insurance Barometer Study conducted by Life Happens and LIMRA, 44% of millennials overestimate the cost of insurance by up to 5 times the actual amount. Not only that, people resist buying insurance due to minimal or no guidance from the insurers. 23 17 20 17 13 7 2 24 20 17 18 14 6 3 0 5 10 15 20 25 30 Independent Brokers Independent Agents Career Agents Banks Full service National Brokers Direct Response Other
Sales of Individual Annuties By Distribution
Channel
This is where insurance brokers come in. Their sole role is to advise people on the kind of insurance to buy based on the clients’ needs. Hence, by educating people about the various aspects of insurance, such as policies, coverage, claims, benefits, and more, brokers can increase their market share. Poor penetration in semi-urban and rural areas Insurance penetration continues to be a challenge. It only marginally improved to 3. percent in 2019 from 2.71 percent in 2001, the Economic Survey 2020-21 shows. The geographical analysis highlights the concentration of brokers in major states and cities, preferably in industrial areas implying low penetration in other areas. This is more severe for the semi-urban and rural retail and SME segment. The low penetration can be attributed to- Lack of insurance knowledge amongst customers Tons of paperwork Complicated policies Poor perception of risks Broker’s high-cost operating model Lack of product innovation and training Insurance policies are often complicated and hence, difficult to understand. An insurance broker is responsible to advise and sell policies to a customer. However, if the broker is unable to understand the policy, it will be difficult for him to convey it to his clients. Therefore, insurers need to simplify their products. Alongside this, brokers should be trained properly about the policies so that they can justify their roles. These challenges have been a part of the industry for a prolonged period. But as the insurance sector makes a shift towards digital, it is set to witness significant growth in various aspects.
1.15 Key Trends in the Insurance Broking Industry
- Embracing Digital Landscape with Cloud Technology COVID-19 has brought some unexpected changes in various sectors across the globe. One trend that remains common in all industries is the reliance on technology and digital products.
leverage this technology to redefine their role as advisors in order to increase their sales efficiency. Insurance companies should work closely with the brokers to train them regarding the product offerings. They should provide clear success metrics, roles, and responsibilities to every broker to keep them at the top of their game. Automated insights into individual broker statistics – premium collected, new leads, and renewals will help in assessing individual performance and understand glitches in the current process.
- Constructing an Omni-channel Strategy for Customers Omnichannel is not just about providing multiple platforms to the customer to interact. It’s about maintaining regular and personalized interaction with the end consumer across various channels. To put customers first every step of the way, brokers need to proactively communicate during the information phase, focus on personalizing interactions with customers on diverse channels during the purchase phase and create a blend between personal contact and digital tools to elevate support and claims. They need to provide consumers with personalized services across the various channels- email, phone, SMS, WhatsApp, and more. Staying on top of the mind of the customer and reaching out to them when they need you the most will help in building a strong relationship. Customer behavioural analysis will help in predicting customers’ next move and acting accordingly.
- Focusing on Risk Management and Compliance As all major insurers start focusing on leveraging technology, they need to pay attention to issues such as customer and data protection and privacy. They should also focus on the company’s code of conduct, risk culture, and customer outcomes. This will put an emphasis on customer protection, including product design and transparency as well as distribution. Digital sales models raise new and more complex concerns over financial crime and buyer verification. And the increasing use of big data demands that privacy and data protection requirements be addressed for an ever-growing body of information. Those that tackle the challenges and move quickly to establish best practices in their organizations will reap the rewards of customer trust.
1.16 About the Company
Unilight is a home-grown insurance & reinsurance broker duly licensed by IRDAI in 2013. It is one of the fastest growing brokerage houses in India, driven by a group of industry professionals having expertise in providing clients with tailor made Insurance solutions including claims management risk, audit etc. Unilight recognizes value of blending youth with experience and have built a strong management team which has acumen, wisdom, experience, future first attitude and ensures timely delivery of ‘real-time’ services. As a practice they reach out to Corporates and assist them in managing and mitigating their risks. They are confident of our resources and capabilities to provide innovative solutions and the best services at all times. All their skills and abilities are concentrated in negotiating the most advantageous, commercially sound and competitively priced insurance program for each of our clients. Unilight is having present network of 8 offices Mumbai being head office Delhi Kolkata Bhubaneswar Surat Ghaziabad Jaipur and Goa Unilight plants to expand its network of offices from 8 at present to 26 by financial 2023 Unilight believes investing in building long lasting relations with its customer driven through our domain expertise and service commitment. Its unerring focus lies on de-risking the unknown and unforeseen risks faced by its clients in their respective areas of business and establish a responsible partnership which add and create value for all its stakeholders.
1.17 Company Logo
- Marine Insurance Transit Insurance is one of the oldest forms of insurance which provides protection to policyholders against loss or damage to cargo in transit from one location to another. This form of insurance also provide protection to water borne moving assets and associated liability risks arising out of such operations. Followings are the most common form of Liability insurance policies being offered by insurers in India: Marine Cargo Insurance (Inland) Marine Cargo Insurance (Overseas) Marine Hull Insurance Ship Builder’s Risk Insurance Ship Owner’s Protection and Indemnity Insurance Charterer's Legal Liability
- Liability Insurance Liability Insurance Policies pay for the compensation amount awarded/settled (including interest) plus defence costs incurred up to limit of liability in policy which are generally expressed for Any One Accident (AOA) and Any One Year (AOY). As against this, Statutory Liability Policies have limits as per the respective Law. Followings are the most common form of Liability insurance policies being offered by insurers in India: Director’s and Officer’s Liability (D&O) Insurance Policy CYBER LIABILITY INSURANCE Commercial General Liability (CGL) Insurance Employers Liability / Workmen's Compensation (WC) Insurance Policy Public Liability Insurance Policy Product Liability Insurance Policy Professional Indemnity (PI) Insurance Policy
- Miscellaneous Insurance Transit Insurance is one of the oldest forms of insurance financial risk which are not part of or excluded under assets insurance policies can be insured under specific insurance policies designed to insure such risks. These policies are customized to suit the requirement of businesses and are flexible in coverage and premium. Followings
are the most common form of miscellaneous insurance policies being offered by insurers in India: Trade Credit Insurance Bankers Indemnity Insurance Sports & Events Insurance Money / Cash Insurance Fidelity Guarantee Insurance
- Specie Insurance Some of uncommon trades and assets carrying disproportionate values have special risks and insurance requirements which are requires specific insurance policies covering associated risks. Followings are the most common form of Specie insurance policies being offered by insurers in India: Jeweller’s Block/Diamantaires Insurance Fine Arts Insurance Cash Currency Management Services Insurance Solution Cash & Bullion Insurance
- Employee’s Benefit Employees are most valuable and complex assets for any business entity thus required to be taken care specially when they are in crises following an adverse event. With this in mind most of the businesses offer their employees insurance benefits to stay them comfortable. This also works as a talent retention strategy and needs to be in line with the competition. Followings are the most common form of employees benefit insurance policies being offered by insurers in India: Group Health / Medical insurance Group Personal Accident Insurance Group Term Life Insurance Policy Gratuity
professionals capable to understand industry specific risks and provide solutions in line with the available insurance products in domestic and global insurance markets. How are we at Unilight different? Team of Domain and sectoral experts with high level of service commitment. Ability to provide end-to end solutions to customers in their risk management and insurance needs. Exposure to global insurance markets and practice backed with reinsurance placement ability. Support in Claims Management.
- Retail Insurance Unilight integrated online business portal policyongo.com provides customers the ease of buying and our POSP partners ease of selling retail insurance products Motor, Health, Accident, Travel, Householders and Life on real time basis. Our focus in retail is to provide insurance protection to populace specially in tier B and C cities in India with affordable insurance plan on real time basis and also to provide support in the event of a loss claim. How are we at Unilight different? Integrated online business portal policyongo.com to provide POS business partners ease of buying retail insurance on real time basis. Online recruitment and training platform in compliance with IRDAI guidelines. Dedicated service team to support business partners in loss claims.
- Reinsurance Placement Unilight has emerged as market leader in providing reinsurance support to domestic and international insurers both on Facultative and treaty arrangement basis. With the opening up of Insurance Market, India has witnessed entry of large number of private insurers and resultantly insurance market in terms of penetration and volumes has grown exponentially in last decade. Rapid industrialization and focus on infrastructure development have seen risks growing in size and complexity. New aged service sector and E-commerce business has redefined business models and exposure to business risk. This economic environment change has resulted into increased demand of insurance protection both for insured and insures end.
How are we at Unilight different? How are we at Unilight different? Our understanding of risks and ability to structure reinsurance programmed. Knowledge and ability to reach specialized reinsurance markets. Credibility with reinsures and ability to deliver on-time facultative reinsurance support to our cedants at fair cost. Post placement support in claim follow up and recoveries.
- Claim Management Most business entities face significant challenges during the Claim Settlement process. Preparing and presenting a claim can be a complex and time-consuming process and may need support of an expert. Unilight is known for handling claims of their customers in most efficient and professional manner with timely and right inputs during the course of preparation, presentation and settlement. Unilight is known for handling claims of their customers in most efficient and professional manner with timely and right inputs during the course of preparation, presentation and settlement. As a broker we have insight of the pain points on the happening of a claim like right values for sum insured, add-on covers etc. We try and ensure that such typical points are addressed at the policy placement stage itself and ensure claims settlements are fair and hassle-free to our customers. Our dedicated claims team gets engaged from the loss event itself and proactively helps customers in the entire journey of claim processing and settlement. How are we at Unilight different? How are we at Unilight different? Dedicated commercial claims vertical having expertise to handle large value claims. End to end support to customers in loss events. Domain expertise in handing property damage and business interruption losses. Proactive involvement during claim preparation and presentation process and support to customers.
Chapter 2 : Statement and Objectives
2.1 Vision
To be one of the most respected and credible Insurance Brokers through Fair, Transparent, Competitive, Ethical and Expeditious Service.
2.2 Mission
To guide our customers transparently and ethically in their journey of buying appropriate insurance covers. We will stay focused on delivering superior products and excellent service to our customers and operate our business through shared value of trust, tolerance and openness.
2.3 Objectives
At Unilight Insurance Broker Pvt Ltd, we strive to provide quality and comprehensive insurance solutions to our clients in India. We aim to provide outstanding customer service and ensure that our clients have the right insurance coverage to protect their investments, assets and businesses. Our team is dedicated to educating our clients on their insurance options and working to find the best coverage to meet their needs. As an insurance broker, we strive to provide the highest level of service and a personalized experience to each of our clients. At Unilight Insurance Broker Pvt Ltd, we strive to provide quality and comprehensive insurance solutions to our clients in India. We aim to provide outstanding customer service and ensure that our clients have the right insurance coverage to protect their investments, assets and businesses. Our team is dedicated to educating our clients on their insurance options and working to find the best coverage to meet their needs. As an insurance broker, we strive to provide the highest level of service and a personalized experience to each of our clients.
2.4 SWOT ANALYSIS
Strength To guide our customers transparently and ethically in their journey of buying appropriate insurance covers. We will stay focused on delivering superior products and excellent service to our customers and operate our business through shared value of trust, tolerance and openness.
Offering a variety of insurance products, such as auto, liability, life and health, that appeal to a variety of target markets is a strength. If you're increasing insurance rates and customers are willing to pay the costs, that means higher commissions for you, making the business more lucrative. Existing customers are a strength since you receive recurring revenue from their payments. If you’ve been in business for years and have built a solid reputation in your local community, this is strength. Building and maintaining strong relationships with the insurance companies you represent is another strength. Weaknesses Relying on paper transactions instead of digital solutions. More effective processes in place for handling accounting, marketing and day-to-day operations, your business may face crises that affect your profitability. Singular focus on servicing the same clients rather than finding new customers who need insurance is a weakness, since you are not increasing your customer base and face problems if clients switch to a competing broker. Opportunities Selling supplemental products gives you an opportunity to increase your profits. Using email and the Internet to conduct business means you can reach more people who need insurance while saving money on processing and marketing costs. Providing services as an insurance consultant, in addition to selling policies, is a way to increase income and become a trusted source for recommending policy coverage. Being proactive in using marketing to recommend products based on customer profiles, such as suggesting boat insurance or supplemental policies, gives you a way to grow your business. Networking and building relationships with other businesses, such as accounting and legal firms, provides an opportunity to seek referrals to businesses and consumers needing insurance policies. Threats Local competitors selling similar policies, as well as banks and Internet brokers, present a threat to our bottom line. As insurance rates increase, some people may move their policies to other insurance agencies, another threat to your profitability. The ease of getting into the insurance business is a threat since it encourages new competition. Changing laws about healthcare may require quick adjustments in the way you offer policies.
