When I first started to learn about pet insurance, I had no idea how what a pet insurance underwriter was so I hope to try to explain to you what I have learnt.
For any insurance product, there are a number of activities that need to be done over the life of a policy. In a nutshell:
- Design: someone dreams up the product and sets the premiums.
- Legal: someone tells each state's Department of Insurance about the policy and premiums and gets it all approved
- Sales: someone sells you that policy and you pay premiums.
- Administration: if you have a question or want to change your address, you contact the appropriate place and someone helps you out
- Risk taking: someone looks after the pot of money to pay the claims
- Claim: when you have a loss, someone pays you your claim
So in the "normal" scheme of things, such as when you buy auto insurance, there's a broker and an insurance company.
- The broker does the selling in return for a commission
- The insurance company does the design, legal work, administration, risk taking, and claims handling for the rest of the premium.
Of course, this is changing with online sales and in that case, the insurance company does it all, including selling.
In the pet insurance world, things are a little different because this is such a new and usual product. In this case,
- The broker not only sells the policy for a commission, but also designs the policy, adminsters it and pays the claims for an additional management fee
- The insurance company does the legal filing and takes the claims risk for the rest of the premium
So when you get your pet insurance policy, it has the insurance company's name on it just like an auto policy would, but when you call to change your address or make a claim, you talk to the broker, not the insurance company.
The insurer calls the broker a "program manager" because that's what they are doing, managing the pet insurance program. The insurance company is called the Underwriter because their name is on the policy - they underwrite the insurance risk.
Help any?
