The contribution of insurance brokers to the UK economy

finance||0financial-markets-and-institutions||38
Sector:Finance | Financial markets and Institutions
Client:N/A
Published: March, 2011
Document type:Report 
Tagged: impact assessment modelling quantitative analysis UK

The market for insurance products, like many other markets, is characterised by imperfect information by each party to the transaction, significant search costs to find the “best” deal, and asymmetric bargaining power. The report shows that insurance brokers play a key role in the marketplace by identifying the risks faced by clients, reducing insurance distribution costs, reducing search cost for clients, reducing uncertainty about the riskiness of potential insurance clients and the reliability and financial robustness of the insurance companies, reducing asymmetric bargaining power, supporting clients when filing a claim and, more generally, supporting and promoting competition in the insurance market.

The report also shows that the total direct and indirect contribution of the UK general insurance brokers to UK GDP is about 1%, the same as that of the agricultural sector.