Independent insurance brokers’ activity specifics: the EU experience and problems in Lithuania

Abstract

The subject of the article is topical because independent insurance brokers are a very important element in the insurance system. Their work depends on the interests of the insured and they are not representatives of any insurance company. However, there is a problem in practice that the business model of independent insurance brokers deviates from the core nature of these entities – independence. This situation is attributable to the payment system of independent insurance brokers. Such complicated system of payment in practice causes some problems associated with other aspects of independent insurance broker’s activity – professional responsibility and civil liability. Analysis of insurance brokers’ activity disclosed the main problems and possible solutions to problematic aspects. The opportunities for improvements of insurance brokers’ payment system and professional liability insurance: to change existing payment system determining salary payment duty for client; to restrict insurers’ and brokerage firms’ commitment agreements; to validate the convergence of the commission; to create possible alternative means of compensations; to insure civil liability not in the same market where they operate but in the market of another country.