Alberta General Insurance Level 1 Practice Exam

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What is the role of a broker in insurance?

  1. Sets insurance policies

  2. Acts on behalf of the insured

  3. Negotiates payments only

  4. Works directly with claims

The correct answer is: Acts on behalf of the insured

A broker in insurance acts on behalf of the insured, representing them in finding and selecting insurance policies that best suit their needs. They do not solely set insurance policies (option A), as these are typically determined by the insurance company. The broker may negotiate payments (option C) with the insurance company on behalf of the insured, but this is not their only role. Brokers also do not work directly with claims (option D), as this task is usually handled by the insurance company's claims adjusters. Therefore, the statement that best describes the role of a broker in insurance is "acting on behalf of the insured."

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