Insurance agents and brokers are both intermediaries between insurance companies and insurance buyers, but they differ in who they represent during the buying process. An insurance agent works with one or more insurance companies, while an insurance broker represents the insurance buyer. Brokers have a distribution agreement with numerous insurers and can therefore sell insurance from more than one provider. Agents, however, are mostly only associated with a single company and only sell their insurance.
When dealing with customers, a broker should clarify how many companies they represent to ensure that customers are fully aware of the broker's authority. Similarly, an agent must also clarify which policies they are contractually authorized to sell to a customer and what they are not. Brokers search the entire market and take quotes from several insurers when looking for the most suitable options for their clients. They can also look for opportunities to reduce their rates by combining different types of insurance in combination packages.
Agents, however, don't have this option. Insurance brokers are suitable if you are looking to compare coverage and rates from the wider insurance market. When a customer's insurance needs are greater than what the standard or “supported” market is willing to insure, they may need access to surplus lines or unsupported insurers. Some insurers try to encourage agents and brokers to write new policies by paying a higher base fee for new policies than for renewals.
However, when selecting an insurance plan, there are more important things to consider: cost, speed, ease, security of your personal data and the satisfaction and peace of mind that these intermediaries can provide. Both captive and independent agents work on a fee basis and can execute an insurance transaction from start to finish, in a variety of insurance plans. When a company hires a broker, they can expect to be guided through the entire insurance buying process. If a retail broker (or agent) can't get the insurance coverage the customer needs from a standard insurer, they can contact a wholesale broker who can manage and complete any insurance-related process quickly and efficiently.