Insurance agents are professionals who help individuals and businesses find the best insurance policies for their needs. They are paid a commission (percentage of their premium) from their insurance company, and the amount of the commission depends on the type and amount of insurance sold. There are two ways insurance agents make money: as producers for insurance agencies, or as independent agents who rely on commissions for their income. Producers for insurance agencies receive a salary to sell insurance on behalf of the agency.
Independent agents, on the other hand, are paid primarily on a commission basis. Most fees represent between 2% and 8% of premiums, according to state regulations. For example, an insurance agent can make a 10% commission if they sell an auto insurance policy, while they can make a 15% commission on a general liability policy. Insurance companies have marketing budgets that they spend to generate leads for their captive agents.
Part of the broker's duty is to understand the clients' situation, needs, and wants to find the best insurance policy within their budget. Choosing the right insurance plan can be complicated, and studies show that many people choose a plan that is not optimal when based solely on their judgment. You can't buy insurance from an insurance broker, but they can help you find the best and most affordable policy. Some insurers try to encourage agents and brokers to write new policies by paying a higher base fee for new policies than for renewals.
While insurance agents and brokers perform similar functions, there are some differences between the two. Specifically for new agents, when trying to become an independent agent, it can be very difficult to be appointed by insurance companies without an existing business portfolio and a solid business plan. Many don't require prior insurance industry experience because most companies have in-house training programs for new agents. Independent agents generally earn the same as non-salaried captive agents with health and life insurance policies, and independent agents have no opportunity to earn performance-based bonuses. The base fee is the standard fee that an insurance agent will earn for the policy sold and is expressed as a percentage of the premium. Since an agent's income depends on commissions and bonuses, their sales excellence is reflected in the money they earn. I have some experience in recruiting and sales, so I hope to be able to harmonize that experience with the knowledge I gain in the insurance industry and achieve success.