What is a Surplus Lines Broker?
A surplus lines broker is an insurance intermediary who represents the insured rather than the insurer. A surplus lines broker specializes in helping consumers find surplus lines insurance coverage in the non-admitted market.
Individuals and businesses looking for surplus lines insurance often need coverage for a unique risk that would not be accepted by a typical insurance agency in the admitted market. A surplus lines broker can assist these consumers in their search for coverage.
Understanding Surplus Lines Brokers
Surplus lines brokers are unique because they can sell policies from several different insurance companies. Unlike independent agents, surplus lines brokers are not the legal representatives of insurers. This means they often do not have the right to act on behalf of insurers, such as to bind coverage. To bind coverage, the surplus lines broker must hand off the account to an agent or insurer for the transaction to be completed.
A broker’s duty is to the consumer. Brokers understand the consumer’s needs and find the right coverage at the right price for the consumer.
How Does a Surplus Lines Broker Make Money?
A broker makes money through broker fees. These are a percentage commission on a policy being sold. Additionally, a broker may also make money by charging transactional fees to initiate changes or help to file claims. They can also make money through consulting fees.
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