INSURANCE BROKERS CHARGES FOR UNDERWRITING ASSISTANCE CAN BENEFIT INSURANCE BUYERS!

Implications: Broker preparation of underwriting data for property/casualty insurance placements can benefit buyers of insurance products by faster and pertinent data assembly which both enhances underwriters understanding of key risk factors and speeds the underwriting process. This makes new placements and renewals more focused and constitutes a valuable service that benefits both insurers and insureds. Such a service should be compensated by insurers but proper disclosure to insureds by brokers must be done in advance to insure transparency. Compensation levels should be commensurate with the complexity and level of data prepared and communicated to insurers.

Analysis: Insurance markets that previously may have shunned underwriting certain industries either due to a perception of high underwriting costs or a lack of understanding of particular risk factors in certain industries will benefit from such packaged underwriting services offered by reputable brokers who provide full and proper disclosure to their clients. Often brokers develop a deep understanding of their clients risks, business standards and management direction and can communicate this effectively to insurers to enable an enhanced underwriting climate and risk transfer acceptance.
 The more sophisticated insurance buyer will appreciate this service and understand it's value to them, but it remains paramount that brokers provide to each of it's clients well in advance the exact compensation that insurers will provide to avoid any potential for impropriety. Brokers should engage their clients on this subject well in advance of any insurance market contact to secure their agreement and avoid any conflict of interest.