Category Archives: Insurance and Loans

Why is an insurance company considered a financial intermediary?

After an incident, or claim, the insurance company just pays for the amount owed by the client to the institution who performed the repair work.

If your house roof is damaged, the roofing contractor has a contract with the home owner. The insurance company does not have a contract with the contractor, but will pay the bulk of the bill.

If the bumper of your car is ruined by a deer hit, the repair shop fixes your car. The insurance company provides the bulk of the funds.

If you are injured in an accident, the insurance company pays funds the emergency room doctor is asking for.

In all three cases, the insurance company does not do the repairs, it does however provide monies toward the cost of those repairs.

So it is an intermediary between the owner and the fixer in a financial manner only.