What's the difference between an insurance agent and an insurance broker?

While both agents and brokers work with insurance companies and insurance buyers, they differ in who they represent during the buying process. An insurance agent represents each of the insurance companies they work with, while an insurance broker represents the insurance buyer. Agents and brokers are primarily intermediaries between an insurance buyer and the insurer. Although their jobs are familiar in that sense, there are quite a few differences in how they do it.

Brokers enjoy a distribution agreement with numerous insurers and can therefore sell insurance from more than one provider. The agent, however, is mostly only associated with a single company and only sells their insurance. The broker searches the entire market and takes quotes from several insurers when looking for the most suitable options for its clients. However, an agent doesn't have this option.

Both agents and brokers are supposed to educate prospective insurance buyers regarding policies available in the market (and with a specific company in the case of an agent), and then negotiate with the seller once something satisfies customers. When dealing with customers, a broker should clarify how many companies they represent. This is 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.

Although it may seem that there are more similarities than differences between the work of an agent and a broker, that is not entirely true. There are some significant differences between the way the two work. The main difference between a broker and an agent has to do with who they represent. An agent represents one or more insurance companies.

Act as an extension of the insurer. A broker represents the insurance buyer. 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.

In addition, they can also look for opportunities to reduce their rates by combining different types of insurance in combination packages. Since agents have twice the responsibility, it is crucial that they are properly informed about issues that can lead to problems. They use their knowledge, expertise and experience to help you assess your unique insurance needs and then find the coverage that best fits your needs. Once your client has accepted a quote and completed a purchase with the insurance provider, the insurance broker receives a certain percentage of the premium cost as a commission from the insurer.

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, they are very similar to insurance brokers, because their duty is to the insurer and not to the customers, there are limits to what they can offer a customer. An insurance agent may be better if you already have a policy directly with an insurance company and want to combine your coverage with other types of insurance. An insurance broker represents consumers in their search for coverage and can sell policies from several different insurance companies for a fee.

However, there are more important things to consider when selecting an insurance plan: cost, speed, ease, security of your personal data and the satisfaction and peace of mind, which come with the in-depth knowledge that these intermediaries can provide. 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. They need to be able to manage and complete any insurance-related process quickly and efficiently.

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. . .

Angelia Brazille
Angelia Brazille

Unapologetic tv guru. Hardcore travel maven. Total travel fanatic. Typical twitter geek. Hardcore explorer.

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