A Reinsurance broker is any person, other than an officer or employee of the ceding insurer, who solicits, negotiates or places reinsurance cessions or retrocessions on behalf of a ceding insurer without the authority or power to bind reinsurance on behalf of such insurer.
The general rule is that the reinsurance broker serves as the ceding insurer’s agent. But there are aspects of the reinsurance broker’s duties that may be viewed as acting, in part, on the reinsurer’s behalf.
A determination of agency will depend on the contractual relationships entered into and the facts surrounding the relationships. The scope of any agency may be spelled out in any written brokerage agreement, or the reinsurance broker may be appointed through Broker of Record Letter (BORL) specifically the party theseeks the services of the reinsurance broker.
Ensuring Contract Certainty Guidelines are adequately met and both parties have clarity on the terms and conditions of the policy. Additionally, to provide documentation for both parties. They actively participate in negotiating for terms favorable for both cedant and reinsurers.
One of the fundamental role of the broker is to negotiate and procure the most competitive premiums, rates and terms for their client. This could be achieved by bundling different businesses together for the reinsurers and could even help in encouraging reinsurers to accept a risk which it might have declined. They also have connections with different reinsurers on the globe, it enables them to solicit for the best terms for risks.
Delegation of reinsurance claims processing and recovery from securities, so that insurers can focus purely on the direct policyholders’ needs, this also creates peace of mind for the ceding insurer.