NU Online News Service, May 19, 3:00 p.m. EDT--The International Federation of Risk and Insurance Management Associations released a position paper today regarding the role of the broker from the perspective of risk managers.

IFRIMA's position is that the business model established by brokers and insurers has not provided enough flexibility for appropriate brokerage services for small, medium, and large accounts.

Susan Meltzer, IFRIMA president, and assistant vice president of Risk Management at Sun Life Financial in Ontario, Canada, said that the IFRIMA board of directors in 2004 determined it would publish a white paper defining the role of the broker with respect to risk management accounts.

The document explains that the level of involvement of the broker may greatly vary from company to company. For larger accounts, for example, the broker relationship is structured like an outsourced activity, and requires personal attention and tailoring of services. While some insurance-purchasing organizations have an internal risk management function others do not. The broker's level of involvement, therefore, is determined by the risk manager.

Ms. Meltzer said that insurance brokerage and industry investigations have "made this topic even more compelling for our position, which is based on the premise that the role of the broker is primarily an outsourced activity, providing additional resources to the risk management department in those areas for which it is not cost-effective for a risk manager to undertake such activities internally."

According to the document, posted on www.ifrima.org, broker relationships include the following roles:

Advisory==The insurance broker can provide the internal risk manager with information that assists the risk manager in determining the risk transfer strategy for their organization.

Transactional==In order to efficiently access the worldwide insurance markets, many commercial insurance buyers utilize the services of insurance brokers, including expertise in marketing. This should include the development of comprehensive, effective underwriting submissions, identifying potential insurance partners and designing and organizing presentations by clients.

Servicing and Administration==Once an insurance policy is placed, regardless of the extent of involvement of the broker in such placement, a significant amount of servicing and administration work remains to be done==which continues from the inception of the policy throughout its expiration. This can include checking policy wordings, premium payments administration, issuing certificates, routine claims administration and other activities. These services should be clearly listed in a comprehensive servicing agreement.

"This paper is being issued at the apex of a very active period for IFRIMA, which is positioning itself more and more as an active partner in the global risk management arena," said Maurizio Castelli, chairman of IFRIMA and group risk manager for Pirelli SpA in Milan.

He said that within the past three years, IFRIMA has supported global risk management conferences in South Africa and in Bermuda, and future conferences are planned for Portugal and Hawaii within the year. "This white paper was proceeded by the enterprise risk management position paper issued last year. These activities reinforce IFRIMA's leading global role in risk management."

The paper was approved at the IFRIMA board of director's meeting, April 20, in Philadelphia.

Special Reports /

IFRIMA Comments On Broker Role

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