The essence and classification of insurance mediation: European and Ukrainian experience

Abstract

According to the European tradition, the essence of insurance mediation is defined as the activity connected with signing and realization of insurance contracts. The most argument and adapted to realities of the Ukrainian insurance market is the definition of the essence of insurance mediation represented in the new version of Ukrainian Law «About insurance». Based on the thoughts of scientists, we propose the author definition of the essence of insurance mediation as the activity directed by mediators to the investigation, and analysis of the insurance market; the presentation of its possibilities to the clients-insurers; supplying with some recommendations; preparing of insurance contract, signing/accompanying during its signing by clients; compensation payment to clients according to the insurance contract; the work with clients for extension of insurance cooperation. The essence of insurance mediation also concerns to the sales of insurance products from one entity (the insurance company) to another (the client). The ES Directives propose the classification of insurance mediators into «dependent» and «independent». According to the traditions of the world mediation, dependent i mediators are agents that act on behalf of an insurance company; independent mediators are brokers. In the world practice, a popular classification is that one classifying dependent mediators into two types: insurance agents (corporative agents) and multi agents. As for the Ukrainian insurance market the both types of insurance agents act there. Generalizing modern classifications, we single out two types of brokers: insurance brokers and reinsurance brokers. The most argument and right is the classification based on thesis about the dependence of insurance mediators: dependent insurance mediators (an insurance agent (exceptional), multi agent) and independent (an insurance, reinsurance broker). The first group of insurance mediators – insurance agents – physical and legal individuals, that act on behalf of and according to interests of an insurer, that is, they perform the insurer’s functions. The second group is insurance (reinsurance) brokers who are legal and physical individuals, that are registered as the entities of entrepreneurial business and they perform the insurance activity on behalf of them and on the basis of insurance contract with the insurer and receive money for it. Direct mediators are insurance agents, insurance brokers, and reinsurance brokers. Non-direct mediators are persons that professionally estimate insurance risks (underwriter, surveyor) and persons that estimate insurance losses (emergency commissar, average adjuster).