Definition:Intermediary
🤝 Intermediary is a broad term for any individual or entity that operates between the insured and the insurer in the placement, servicing, or administration of insurance policies. The category encompasses brokers, agents, MGAs, wholesale brokers, and increasingly, technology-driven platforms that facilitate the distribution of coverage without themselves bearing underwriting risk.
🔄 The way an intermediary functions depends heavily on its specific role and the authority it holds. A retail broker typically represents the buyer, shopping the market for the best combination of coverage, price, and carrier financial strength. An agent, by contrast, may represent one or more carriers and place business on their behalf. At the wholesale tier, surplus lines brokers connect retail brokers with non-admitted carriers for hard-to-place risks. MGAs go further still, wielding delegated underwriting authority that allows them to bind coverage, issue policies, and sometimes handle claims — blurring the line between intermediary and quasi-carrier. Compensation models vary correspondingly: intermediaries may earn commissions, brokerage fees, profit-sharing commissions, or a combination, each governed by agreements with the carriers they represent.
💡 Intermediaries collectively account for the vast majority of premium flow in both commercial and personal lines markets, making them indispensable to the industry's functioning. Their advisory role reduces information asymmetry — helping buyers understand complex policy language and helping carriers access risks they could not efficiently reach on their own. The rise of insurtech has introduced digital intermediaries — from online comparison platforms to API-connected embedded-insurance distributors — that challenge traditional models while still performing the fundamental intermediary function of connecting risk with capital. Regardless of form, intermediaries face licensing requirements, fiduciary or good-faith obligations, and growing regulatory scrutiny around transparency and conflicts of interest.
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