The co- insurance market is where generally highly complex or (financially) extensive risks are insured. So extensive that the risks are too high to be borne by a single insurer and require two or more insurers to share the risk on one policy. Which is why it is called ‘co-insurance’. Each insurer underwrites a certain percentage of the risk and will in case of loss or damage pay an equal percentage of the claim to the injured party/parties. Several parties are involved in the conclusion of an insurance contract in the corporate insurance market, i.e.:
The insured (parties)
Companies, (semi-)public bodies and other organisations and institutions looking to minimise their financial and other business risks, for instance by taking out insurance.
The (insurance) brokers
It is their job to advise insured parties on risk management measures and, as part thereof, arrange a customised, comprehensive package of insurance solutions.
They act as risk-bearers of the risks to be insured. Due to the extent and complexity of risks, the co-insurance market generally sees two or more insurers acting as risk-bearers on a single policy.
Underwriters and insurers
The term ‘underwriter’ can both refer to insurance companies and authorised underwriting agents. This with the (original) differentiation between insurance companies - the ultimate risk-bearers - and underwriters/authorised underwriting agents - who accept risks on behalf of insurance companies. Both insurers and underwriters assess and analyse the risk to be insured. They draw up the insurance conditions (which risks are covered by the policy) in consultation with the insurance broker and determine the premium to be paid after negotiations with the insurance broker.
The role of the insurance broker
In the early days of exchange trading, the commodity broker, stockbroker or wholesaler were the ones who advised insured parties in an independent, additional function. In the course of time these advisory services developed into an independent profession: the insurance broker. The insurance broker serves as the contact for insured parties, advising them on risk management and arranging a customised insurance package. In case of loss or any other problem, they advise and assist their customers.
Professional skill of insurance brokers and intermediaries
In order to comply with consumer protection laws, insurance brokers and other intermediaries have to meet statutory, professional requirements. As of 1 January 2001, the legal recognition and protection of the general title 'broker' and the title ‘insurance broker' used in the insurance sector, no longer exist. The professional skill of the intermediary is currently regulated in the Financial Supervision Act [Wet op het Financieel toezicht]. It also includes permanent education requirements. To enable (employees of) brokers to distinguish themselves in relation to these minimum statutory, professional requirements, the Insurance Registration Foundation (SAR) formulated two recognition regulations:
• RMiA (Registered Insurance Broker)
• RAiA (Registered Insurance Adviser)
Registered parties under both regulations have to meet higher requirements than the ones laid down in the Financial Supervision Act. Thereby both recognition regulations also serve as a hallmark.