The role of the insurance company:
In the financial industry, the insurance company creates value by pooling and redistributing various types of risk.
The company has to develop and maintain an efficient claims process while also tailoring insurance policies to suit individual needs. The insurance contract is the legal document that must outline the coverage, features, conditions and limitations of an insurance policy. The insurance company must provide a transparent insurance contract with clear terms.
Liaising with brokers or in-house insurance agents is also part of the role of the insurance company. Even though the aim is to operate profitably, the insurance company must also provide insurance cover that is in line with regulations set by the regulators.
How insurance companies work:
Insurance is a financial product sold by insurance companies to safeguard individuals and/or their property against the risk of loss, damage or theft.
When you buy a policy you make regular payments, known as premiums, to the insurer.
If you make a claim your insurer will pay out for the loss that is covered under the policy. If you don’t make a claim you won’t get your money back.
Insurance, a form of risk transference, is appropriate if the loss will cause your or your loved ones a significant financial loss or inconvenience.
The insurance company may work with brokers or in-house agents who work exclusively for the company. These agents sell policies for an insurance company.
Captive Agents represent a single insurance company. These agents are required to only do business with that one company. Independent agents, on the other hand, represent multiple companies and work on behalf of the client.
Insurance works by pooling risk, so you essentially pay for the probability of loss and the protection that you will be paid for losses in the event they occur.