Who's who in the Risk Zoo?

In the world of risk and insurance, there is a growing number of "players" and participants and they come from a variety of backgrounds such as; legal, actuarial, accounting, finance, operations, insurance, safety, and security. Each possessing a different skill set and approaching risk from a slightly different frame of reference, but all with the same goal.  While every role in risk management is important, for the purposes of this blog, I want to limit the conversation to three. The Insurance Broker, The Insurance Underwriter, and The Risk Consultant.   

The Insurance Broker:  If you have ever purchased insurance (either for business or personal reasons) chances are good that you purchased your coverage through an insurance broker.  This sounds pretty basic, except in many cases the term Insurance Broker is unknowingly used synonymously as Insurance Underwriter.  Insurance brokers and insurance underwriters may work in the same industry and serve many of the same customers, but their primary duties are very different.  An Insurance Broker is the primary point of contact between the client and the insurance companies. Their chief responsibilities are: 

• Gather information about the risk exposure of the client and present the information along with the coverage requirements to several underwriters shopping for the best possible coverage on behalf of the client. 
• Collect the quotes from the underwriters compare the differences in coverage and rates.  Make a recommendation on a selection based on an understanding of the client's needs and the availability of coverage. 
• Perform administrative tasks associated with managing the coverage throughout the policy period; such as providing certificates of insurance, making policy changes, maintaining accurate records, and processing policy cancellations and renewals. 
•  The Broker communicates frequently with the client answering questions and educating them on different aspects of the coverage that has been purchased.   

The Insurance Underwriter:  The insurance underwriter, on the other hand, works for the insurance company.  In some cases, the underwriter and Broker will work for the same company, but in most cases, the Broker and Underwriter work for different companies.  The Insurance Underwriter almost never communicates directly with a client.  The Underwriter's chief responsibilities are: 

• Analyze the information the Broker has presented on behalf of their client in regard to insurance coverage. 
• Decide on the extent of coverage and the rate for the coverage that can be provided adhering to the insurance company's policies, and allowable risks. 
• Communicate the decision to the Insurance Broker and the company. 

The Risk Consultant:  Finally, the Risk Consultant is an expert advisor who can help organize, prioritize and make sense of the chaos we know as the risk.  The Risk Consultant works directly for the client, exclusive of the Insurance Broker.  The Consultant's chief responsibilities are: 

• Help the business decision makers (Client) identify, analyze, and prioritize potential risk. 
• Help the client understand their appetite for risk and develop a strategy for managing their risk. 
• Act as an advisor to the selection of a Broker and with navigating the complexity of an appropriate insurance program (in support of the risk finance strategy). 
• Advise on programs, policies, and procedures to supplement risk financing in developing the company's overall risk strategy. 

One thing to consider when interviewing your insurance broker and you are considering engaging a Risk Consultant; select someone who has experience in your particular industry.  Insurance is not one size fits all so the more experience your Broker and Consultant have in your particular industry, the better the recommendations will be suited to your needs 

And so, you see, help is much closer than you might have thought and it is not necessary to go it alone.  

Until next time, stay safe and be kind to one another.