Invoice Types and Requirements in Australia

The insurance value chain, just like that of business, has essential interconnected components that function together. All the components work together to successfully achieve the primary function of the provision of insurance policies to clients. Insurance agents are essential components of the insurance value chain.

An insurance agent is a person that represents an insurance company in the process of negotiating and selling insurance policies to beneficiaries. The insurance agent listens to the client and tries to sell the right insurance policy. To fully understand the role of an agent in the insurance industry, it is crucial to have some understanding regarding the nature of the insurance value chain.

The Insurance Value Chain

The insurance value chain consists of five major components. These are:

Research and Development

This part of the value chain lies within insurance companies. Depending on the size of an insurance company, research and development may be a unit or a department, which is responsible for the development of different insurance products that aim to satisfy various types of clients. The personnel here make use of customer feedback and information from rival companies to produce better products. Additionally, products produced must be novel.

Insurance companies that aim to remain competitive must be innovative in developing products. They must be competent, reliable, and financially stable. They must be quick to react to change in demand and open to going into new business. Additionally, they must recognize the needs of their clients as they age or move up the corporate ladder. This is important to provide products that are right for various clients through various brokers and agents. Therefore, the individuals that man this value chain must have the capacity to foresee changes in the market and clients’ needs to keep their companies afloat.

Product Manufacturing

This section of the value chain must be profitable and flexible. The personnel that handles this section must keep in mind that customer satisfaction is critical for the growth of the company. Therefore, the insurance company must be able to think outside of the box when producing and managing products.

Manufactured products must allow for a flexible pricing framework to attract a good market. In order to achieve this goal, the insurance company must be able to minimize processing fees and provide flexible options. The products must be packaged to make it easy for the distributors to market policies. Products must be designed to appeal to the different social classes of people.


The brokers and agents are an essential part of the distribution segment. This group directly interacts with customers. Therefore, they must have the necessary knowledge to sell products to customers appropriately. The insurance company must be willing to retrain and equip this group with the right customer relations tools for interaction and communication appropriately with clients.

As the world becomes more technologically advanced, many more distribution activities are going to be handled online. However, it may take longer to develop as most products are still too complex to be sold to customers without an agent or a broker.


This part of the value chain shows the clients the service that the insurer can offer. In most cases, the client interacts with this section the most. It involves a team within the insurance company that follows up with customers with additional products to enhance the client’s experience. It helps to reassure the client of getting the full value of their policy throughout its existence. It also allows the insurance company to know more about their client and properly manage the relationship between the two parties. Doing this is likely to increase the user experience and ultimately increase user satisfaction.

Also, the insurance company must be flexible to a certain degree in allowing customers to modify their policies, which adds to the general client’s satisfaction.


This part of the value chain is primarily pushed through the use of technology. It allows the clients to participate in the management of their portfolio. It also entails providing products with various options that strengthen the relationship between the two parties. Recycling is often used to provide continuity for clients before the end of their policies.

Types of Insurance Agents

There are two types of insurance agents, which are a captive agent and an independent agent.

Captive Agent

This type of agent represents a single company. This type of agent only sells the products of one company to clients irrespective of how good they can market. The captive agent is paid by the insurance company that employs them. In some cases, companies may also give their agents commission for every client they can secure. The captive agent’s main advantage is that he or she would be recognized with a particular brand, which makes the work relatively straightforward. In many cases, captive agents are mostly masters of their trade. The biggest demerit of a captive agent is their inability to sell products from other insurance companies.

Independent Agent

These types of agents usually own their own business. Therefore, they can sell insurance policies from different companies to their clients. As such, independent insurance agents are sometimes called brokers. These types of agents can have multiple relationships with various insurance companies, just like the typical stockbroker. However, the primary responsibility of the independent agent is to serve their clients, unlike the captive agent, who represents the insurance company.

In most cases, the independent agent would be in a better position to protect the interests of clients as they are not bonded to any insurance company. Therefore, brokers are professional and fair when presenting the advantages and disadvantages of insurance policies to clients. Also, these companies rely on commission as income.

Different independent agents come in different sizes. The main disadvantage of brokers is that their businesses are most often small companies that may not have sufficient resources as they try to offer as many options as possible to clients.


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