Role of an Insurance Broker

Significant Changes in the Brokerage Market Over the Past Two Years

The brokerage market has experienced significant changes in the past two years, with considerable differences between the situation then and now, explained Stefan Prigoreanu, CEO of Millennium Insurance Broker. "A lot has happened in the past two years; there are profound changes at the level of the brokerage market. First of all, the level of mediation through brokers has continuously increased, which is a very positive development. At the end of 2015, brokers mediated about 60% of insurance premiums. Why do I say this is very positive? Because insured individuals then have a professional, a knowledgeable expert, when they need an insurance policy. Additionally, when a claim occurs, the broker can assist with urgent advice and guide them through the steps to follow in the event of an unpleasant incident, thereby eliminating the risk of an incomplete claim file from the start," Prigoreanu noted.

The increase in the level of mediation has also been influenced by a shift in consumer perception, driven by difficult economic conditions. "The financial crisis has slightly altered people's perception of purchasing goods and services. It is clear that people check 2-3 sources when they want to buy something, and the same applies to insurance. Clients have the option to go directly to 4-5 insurers and negotiate terms themselves, or they can go to a single broker who provides the necessary advice for optimal selection," emphasized the CEO of Millennium Insurance Broker.

The advantages of working with brokerage firms extend beyond just the clients. "It is also beneficial for insurance companies to work with brokers because they avoid the costs associated with developing their own networks, such as equipment, office supplies, premises, and training of sales personnel, among other things. All these costs are transferred to the insurance broker, who is paid a commission," Stefan Prigoreanu explained.

One of the most important roles of brokers is to educate and inform clients about the importance of optional insurance policies. However, intermediaries are also essential for mandatory policies. "Let's not forget that even for mandatory products, the broker's role is crucial. Currently, insurers do not have offices open throughout the country and cannot afford these expenses. Therefore, it is very important for brokers to have territorial and national presence— all major brokers have nationwide networks, and in every locality in the country, there is at least one person from whom a PAD or RCA policy can be purchased," added the CEO of MIB.

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