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

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IFRIMA's position is that the business model established bybrokers and insurers has not provided enough flexibility forappropriate brokerage services for small, medium, and largeaccounts.

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Susan Meltzer, IFRIMA president, and assistant vice president ofRisk Management at Sun Life Financial in Ontario, Canada, said thatthe IFRIMA board of directors in 2004 determined it would publish awhite paper defining the role of the broker with respect to riskmanagement accounts.

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The document explains that the level of involvement of thebroker may greatly vary from company to company. For largeraccounts, for example, the broker relationship is structured likean outsourced activity, and requires personal attention andtailoring of services. While some insurance-purchasingorganizations have an internal risk management function others donot. The broker's level of involvement, therefore, is determined bythe risk manager.

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Ms. Meltzer said that insurance brokerage and industryinvestigations have "made this topic even more compelling for ourposition, which is based on the premise that the role of the brokeris primarily an outsourced activity, providing additional resourcesto the risk management department in those areas for which it isnot cost-effective for a risk manager to undertake such activitiesinternally."

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

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Advisory==The insurance broker can provide theinternal risk manager with information that assists the riskmanager in determining the risk transfer strategy for theirorganization.

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Transactional==In order to efficiently accessthe worldwide insurance markets, many commercial insurance buyersutilize the services of insurance brokers, including expertise inmarketing. This should include the development of comprehensive,effective underwriting submissions, identifying potential insurancepartners and designing and organizing presentations by clients.

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Servicing and Administration==Once an insurancepolicy is placed, regardless of the extent of involvement of thebroker in such placement, a significant amount of servicing andadministration work remains to be done==which continues from theinception of the policy throughout its expiration. This can includechecking policy wordings, premium payments administration, issuingcertificates, routine claims administration and other activities.These services should be clearly listed in a comprehensiveservicing agreement.

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"This paper is being issued at the apex of a very active periodfor IFRIMA, which is positioning itself more and more as an activepartner in the global risk management arena," said MaurizioCastelli, chairman of IFRIMA and group risk manager for Pirelli SpAin Milan.

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

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

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