Insurance intermediaries based in Cameroon facilitate the purchase and placement of insurance. Insurance brokers provide insurance companies and consumers services that complement the insurance placement process.
Usually, insurance intermediaries have been categorized as either insurance agents or brokers. The distinction between the two relates to how they function in the marketplace.
Insurance Agents
Insurance agents are, in general, licensed to conduct business on behalf of insurance companies. Agents represent the insurer in the insurance process and usually operate under an agency agreement with the insurer.
The insurer-agent relationship can take several different forms. In some markets, agents are "independent" and work with more than one insurance company (usually a small number of companies); in others, agents operate exclusively – either representing a single insurance company in one geographic area or selling a single line of business for each of several companies.
Agents can operate in many different forms – independent, exclusive, insurer-employed, and self-employed.
Insurance Brokers
Insurance brokers typically work for the policyholder in the insurance process and act independently about insurers. Brokers assist clients in choosing their insurance by presenting them with alternatives in terms of insurers and products.
Acting as "agents" for the buyer, brokers usually work with multiple companies to place coverage for their clients. Brokers obtain quotes from various insurers and guide clients in determining the adequate policy from a range of products.
There are distinctions among brokers in some markets depending upon the types of insurance they are licensed to intermediate all lines of insurance, property, and casualty or life/health coverage.
There are also distinctions between "retail brokers," who negotiate insurance contracts directly with consumers, and "wholesale brokers," who deal with retail brokers and agents, but not directly with consumers.
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Reinsurance brokers
Reinsurance brokers solicit, negotiate and sell reinsurance cessions and retrocessions on behalf of ceding insurers seeking coverage with reinsurers. Reinsurance brokers can also be involved in a reinsurer's retrocession of parts of its risk. A broker's role may change during an insurance transaction and throughout an ongoing relationship with a client as a technical matter.
Many brokers sometimes act as an "agent" of the insurer and other times as a "broker" when assisting a client with insuring its risk exposures through an insurance contract with a traditional carrier. For example, the broker acts on behalf of the client when negotiating the insurance contract and placing the policy.
Role of Brokers
When the broker provides services that would otherwise be handled directly by the insurance company, such as premium payments and claims handling, the broker essentially acts as an agent for the company. This unique concept makes the insurance process more efficient for both the policyholder and the insurer.
As a practical matter, regardless of the legal role in which a broker is acting, how the broker approaches all such placements for their clients is as an intermediary – working on behalf of their clients to facilitate the consummation of insurance contracts with carriers that have the ability and capacity to adequately insure their risks.
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Although such an activity-based approach is increasingly used worldwide, the legal status of insurance intermediaries varies throughout the international insurance market. For purposes of this memorandum, included within the term "intermediary" are insurance agents, brokers, producers, advisors, and consultants.
The Role of Insurance Intermediaries
As players with both broad knowledge of the insurance marketplace, including products, prices, and providers, and an acute sense of the needs of insurance purchasers, intermediaries have a unique role – indeed many functions – to play in the insurance markets in particular and, more generally, in the functioning of national and international economies.
Intermediary activity benefits the overall economy at both the national and international levels: The role of insurance in the economy's overall health is well-understood.
Without the protection from the risk that insurance provides, commercial activities would slow, perhaps grinding to a halt, thus stunting or eliminating economic growth and the financial benefits to businesses and individuals that such change provides.
The role of insurance intermediaries in the overall economy is, essentially, one of making insurance – and other risk management products – widely available, thereby increasing the positive effects of insurance generally – risk-taking, investment, provision of basic societal needs, and economic growth.
Intermediaries bring several factors to the insurance marketplace that help increase the availability of insurance generally.
Innovative marketing
Insurance intermediaries bring innovative marketing practices to the insurance marketplace. This deepens and broadens insurance markets by increasing consumers' awareness of the protections offered by insurance, their awareness of the multitude of insurance options, and their understanding of how to purchase the insurance they need.
Dissemination of information to consumers
Intermediaries provide customers with the necessary information to make educated purchases/ informed decisions. Intermediaries can explain what a consumer needs and the options in terms of insurers, policies, and prices. Faced with a knowledgeable client base with multiple choices, insurers will offer policies that fit their customers' needs at competitive prices.
Dissemination of information to the marketplace
Intermediaries gather and evaluate information regarding placements, premiums, and claims experience. When such knowledge is combined with an intermediary's understanding of the needs of its clients, the intermediary is well-positioned to encourage and assist in the development of new and innovative insurance products and create markets where none have existed. In addition, disseminating knowledge and expanding markets within a country and internationally can help attract more direct investment for the insurance sector and related industries.
Sound competition
Increased consumer knowledge ultimately helps increase the demand for insurance and improve insurance take-up rates. High insurance utilization allows producers of goods and services to make the most of their risk management budgets and take advantage of a more competitive financial climate, boosting economic growth.
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Spread insurers' risks
Quality of business is essential to all insurers for several reasons, including profitability, regulatory compliance, and, ultimately, financial survival. Insurance companies need to make sure the risks they cover are insurable and spread them appropriately, so they are not susceptible to catastrophic losses.
Intermediaries help insurers in the difficult task of spreading the risks in their portfolios. Intermediaries work with multiple insurers, a variety of clients, and, in many cases, in a broad geographical spread. They help carriers spread the risks in their portfolios according to industry, geography, volume, line of insurance, and other factors. This allows insurers from becoming over-exposed in a particular region or a particular type of risk, thus freeing precious resources for use elsewhere.
Reducing costs
By helping to reduce costs for insurers, broker services also reduce the insurance costs of all undertakings in a country or economy. Because insurance is an essential expense for all businesses, a reduction in prices can have an enormous impact on the general economy, improving the overall competitive position of the particular market.
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List of Five Insurance Intermediaries Based in Cameroon (Brokers)
Below are the five (5) insurance intermediaries or brokers based in Cameroon:
- Ascoma Cameroon.
- Gras Savoye Cameroun.
- Office de Courtage d'Assurance (OCA).
- Nosak Business Group.
- Mount Fako Insurance Brokers.
Insurance Intermediation in practice
The intermediary's role within this enterprise stems from two essential functions: reducing search costs and uncertainty.
Search costs
Intermediaries reduce the search costs to insurance buyers looking for the right coverage and insurer for their risks. They reduce sales and marketing costs to insurance companies searching for insurance buyers.
Intermediaries know the insurance marketplace. They know their clients' risks; they know the insurers willing to cover those risks, and they know the best way to secure that coverage.
Uncertainty
Insurance purchasers and companies do not have all the information relevant to the placement of a policy, which makes it difficult to negotiate a fair price and the proper terms and conditions of a policy. Purchasers know the risks in need of coverage but may not see the insurer's financial health or the prevailing requirements of the insurance market. On the other hand, insurers may have all the company and market financial information necessary to make a decision but are not in a position to know enough about the risk and the prospective client.
Intermediaries know the insurance marketplace solicit and provide information on insurance purchasers and companies, making the information more easily understood to both parties to a transaction.
In the interest of long-term client and insurer relations, brokers have a strong incentive to ensure that all parties have the information they need so that they can enter into a mutually beneficial arrangement.
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