The corporate insurance market, or co-insurance market, is where generally highly complex or (financially) extensive risks are insured. So extensive that the risks are too high to be borne by a single insurer. In that case two or more insurers share the risk on one policy, which is why it is called `co-insurance’. Each insurer underwrites a certain percentage of the risk and will in case of loss or damage pay an equal percentage of the claim to the injured party/parties.
Insured parties are mostly companies, (semi-)public bodies and other organisations and agencies looking to minimise their financial and other business risks. One way to do so is by taking out insurance.
The (insurance) broker’s job is to advise insured parties on risk management measures and, as part thereof, arrange a customised, comprehensive package of insurance solutions. In the early days of exchange trading, the commodity broker, stockbroker or wholesaler were the ones who advised insured parties in an independent, additional function. In the course of time these advisory services developed into an independent profession: the insurance broker. The insurance broker serves as the contact for insured parties, advising them on risk management and arranging a customised insurance package. In case of loss or any other problem, the insurance broker will advise and assist their customer.
Insurers act as risk-bearers of the risks to be insured. Due to the extent and complexity of risks, the co-insurance market generally sees two or more insurers acting as risk-bearers on a single policy.
Underwriters and insurers
The term ‘underwriter’ can both refer to insurance companies and authorised underwriting agents. This with the (original) differentiation between insurance companies – the ultimate risk-bearers – and underwriters/authorised underwriting agents – who accept risks on behalf of insurance companies. Both insurers and underwriters assess and analyse the risk to be insured. They draw up the insurance conditions (which risks are covered by the policy) in consultation with the insurance broker and determine the premium to be paid after negotiations with the insurance broker.