Many institutional insurance purchasers buy insurance through an insurance broker. While on the surface it appears the broker represents the buyer and typically counsels the buyer on appropriate coverage and policy limitations, in the vast majority of cases a broker's compensation comes in the form of a commission as a percentage of the insurance premium, creating a conflict of interest in that the broker's financial interest is tilted towards encouraging an insured to purchase more insurance than might be necessary at a higher price. Insurance may also be purchased through an agent.
An independent insurance consultant advises insureds on a fee-for-service retainer, similar to an attorney, and thus offers completely independent advice, free of the financial conflict of interest of brokers or agents. A tied agent, working exclusively with one insurer, represents the insurance company from whom the policyholder buys while a free agent sells policies of various insurance companies. A broker generally holds contracts with many insurers, thereby allowing the broker to "shop" the market for the best rates and coverage possible. However, such a consultant must still work through brokers or agents in order to secure coverage for their clients. This is associated with reduced purchasing of insurance against low-probability losses, and may result in increased inefficiencies from moral hazard.
In the United States, economists and consumer advocates generally consider insurance to be worthwhile for low-probability, catastrophic losses, but not for high-probability. Consumers have shown a tendency to prefer low deductibles and to prefer to insure relatively high-probability, small losses over low-probability, perhaps due to not understanding or ignoring the low-probability risk. small losses. Because of this, consumers are advised to select high deductibles and to not insure losses which would not cause a disruption in their life. Industry and community groups, and academics, it is clear that race has long affected and continues to affect the policies and practices of the insurance industry. The National Fair Housing Alliance, the National Consumer Law Center, and the Center for Economic Justice, for relying on data provided by the insurance industry. From a review of industry underwriting and marketing materials, court documents, and research by government agencies.
Redlining is the practice of denying insurance coverage in specific geographic areas, supposedly because of a high likelihood of loss, while the alleged motivation is unlawful discrimination. Racial profiling or redlining has a long history in the property insurance industry in the United States. The report was disputed by representatives of the Consumer Federation of America. All states have provisions in their rate regulation laws or in their fair trade practice acts that prohibit unfair discrimination, often called redlining, in setting rates and making insurance available. The FTC indicated little data was available to evaluate benefit of insurance scores to consumers. In determining premiums and premium rate structures, insurers consider quantifiable factors, including location, credit scores, gender, occupation, marital status, and education level.