In this day and age, medical inflation, risk of unforeseen/untoward medical emergencies and tax benefits are often cited as some of the reasons to opt for a health insurance cover. You typically buy a health insurance cover from either a broker or an agent. More often than not, many often use the words broker and agent interchangeably without understanding the difference between the two.
Who is a Health Insurance Agent?
An insurance agent, more often than not, represents an insurance provider’s interests given that the latter cannot reach out to the target customers. Although licensed by IRDA and trained, insurance agents are not accountable in that they cannot be dragged to court. In case of any disputes, it is the insurance company which will be in the dock and find itself in legal wrangles. An agent, can however, get his or her license cancelled in case of any wrongdoings.
Who is a Health Insurance Broker?
A broker claims to act in the interest of the customer and can be dragged to court by the latter in case of any disputes. A broker offers a comparative analysis of various health insurance policies to the customer so the latter can opt for the best policy. Brokers and customers, therefore, share a fiduciary (legal) relationship based on trust. Brokers have a responsibility to help the customer choose an insurance policy most suitable to latter’s financial requirements.
Differences between Health Insurance Agents and Brokers:
The following table shows various differences between insurance brokers and agents
|Feature||Insurance Agent||Insurance Broker|
|Loyalty||Given that an insurance agent in most cases, represents the interests of only one insurance company, his or her main objective is to sell the maximum number of policies of the company||A health insurance broker’s is not concerned with generating revenue for any single health insurance company. As a result, he or she works in the interest of the customer. Brokers help customers decide upon a policy|
|Personalised service||A health insurance agent works in an individual capacity, offering services to a specific number of clients to whom he can reach out at any time. Consequently, insurance agents provide more personalised services and attention to all customers||As opposed to insurance agents, health insurance brokers, by and large, function by way of organizations. As a result, brokers may be more professional. All the same, the personalised attention, often cited as one of the strengths of agents is often lacking amongst brokers|
|Knowledge||Agents have to clear an exam and therefore have an in-depth and often thorough knowledge of their company’s health insurance policies. Also, in-house training is provided to agents. However, an agent does not have a proper understanding of health insurance policies offered by other companies apart from the one he or she represents||Given that brokers are not attached to any single company and sell insurance policies of many companies, they have a wide knowledge base of all policies. There is a strict criteria in place for a broker to receive a license. A broker is also more accountable given that he or she is under the purview of IRDA for audit and other compliance procedures|
|Negotiation||Agents present the case of customers on an as-is basis and do not have the mandate to endorse or support the stand of the latter in case of any disputes||Brokers have superior negotiation skills thanks to their enhanced domain knowledge. As a result, brokers are in a better position to address, negotiate and resolve any outstanding issues|
|Specialization||Agents, in most cases, sell various insurance products apart from health insurance and therefore, do not specialize in the said field||There are brokerage firms which are specialized in the health insurance sector. The firms primarily sell health insurance policies|
|Strict criteria||Health insurance agents, in most cases, do not have to fulfill any strict eligibility criteria and regulations to receive their IRDA license since they do not have high stakes as compared to health insurance brokers||Brokers have to meet strict regulations including investment in their business to receive the license. By default, therefore, brokers have more bigger stakes in their business and have more additional capabilities|
|Robust processes||Agents’ service largely depends upon their level of interaction with customers rather than an established process||Brokers forms are more process-driven and have robust end-to end established processes in place|
|All India||Agents’ services are more or less restricted to his or her vicinity and depend upon TPAs for support of any kind||Most broker firms have a pan-India presence and therefore, offer service sans support of any external agency|
|Escalation||Customers who wish to escalate any issue may not stand a good chance with agents given the latter’s limited exposure in his or her company||Broker firms have several experts and liaise with various offices. As a result, brokers can help customers who wish to escalate any issue|
|Volume||Agents do not conduct huge volumes of business owing to their limited financial outlay||Broker firms have more financial reach, brokers have higher volumes of business|
|Value added services||Agents, in most cases, provide health insurance policy services only||Many brokers offer some services related to health insurance such as check-ups, wellness programmes and so forth|
|TPAs||Agents, by and large, interact with officials in their insurance office only and have little or no contact with TPAs (third party administrators)||Brokerage firms or organisations have greater interface with various hospitals and third party administrators across the country on a regular basis|
|Credibility||Given that agents sell only one insurance product, they may not honestly reveal or focus on the flip side or drawbacks of a product. Customers should, therefore, examine the policy document carefully||Brokerage firms or organizations, in all likelihood, may provide an honest assessment and comparison of various health insurance policies available in the market for the benefit of customers|
GST rate of 18% applicable for all financial services effective July 1, 2017.
Disclaimer: Premiums may vary depending upon factors like age, location and prevailing taxes/GST.