Definition: Insurance referral refers to a process by which an insurance broker or agent refers new clients to a specific company in exchange for commission or other financial reward. The term comes from the German term "inspektion" meaning inspection, as it involves an evaluation of whether a particular policy meets specified standards and requirements. Insurance companies typically require agents to conduct an inspection to ensure that policies are up-to-date and meet their deductibles, limits, and coverage limitations. Insurance referral is often seen as a way for insurance agents to earn commission or additional income by bringing in new clients who may not have sought it themselves, while also offering them the benefit of having an experienced broker with knowledge and expertise in their field. This can be particularly useful for businesses looking to expand their customer base or find new policyholders. The process typically involves the agent visiting the insurer's offices, going through a screening process, and presenting their findings to the company. The insurance company then decides whether to accept the referral based on the results of the inspection. If it is accepted, the agent receives a commission for recommending policies they have reviewed to new clients. If not, the insurance company may ask the agent to refer them themselves. It's worth noting that in some jurisdictions, there are regulations governing the process of insurance referrals. For example, in many countries, agents must undergo strict training and compliance with laws and regulations related to insurance practices before they can operate as brokers or agents.
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