Insurance Mediation

A multidimensional activity at the service of private consumers and business

 

What appears a simple concept “insurance mediation” is in fact a multidimensional activity that requires a great variety of skills and qualities if it is to be a successful business in a very competitive market.  

 

The market for insurance products, like many other markets, is characterized by imperfect information by each party to the transaction, significant search costs to find the “best” deal, and asymmetric bargaining power. Through their various activities, intermediaries help clients and insurance companies overcome a number of market failures which otherwise would hamper competition. These activities are important for all types of insurance buyers, large companies, SMEs and private consumers.  

 

Some examples: 

î         Business insurance intermediaries help identify the risks clients face, ensuring that clients take informed decisions about the risks they wish to insure.

î         They help overcome the clients’ imperfect knowledge of the marketplace and reduce the clients’ search costs by helping them to find the most appropriate insurance policy at the time of placement & at each subsequent renewal. 

î         Moreover, they also help clients obtain better terms on their policies, due to their knowledge of the market. 

 

We can identify other examples of  services intermediaries offer to their clients such as claims related services and policy administration. This variety of services and business models illustrates the dynamism of this profession. Also, insurance intermediaries help insurance companies overcome their imperfect knowledge of the precise risk profile of potential clients. They facilitate entry into the market by new insurance companies, as the latter can reach a wide client base without having to incur the costs of building their own distribution network.