The terms ‘insurance agent’ and ‘insurance broker’ are often used interchangeably in the insurance industry. However, there are some distinct differences between these two job titles. Therefore, before enlisting the help of an insurance agent or broker, it is important to understand the differences between these two types of insurance sales professionals.
What Is an Insurance Agent?
An insurance agent is a person that represents one or more insurance companies and sells insurance plans to residential and commercial buyers. “Captive” insurance agents represent just one insurance company, while “independent” insurance agents sell policies for multiple insurance companies.
Insurance agents act as intermediaries who work with insurance policy providers who need information about available insurance policies. An insurance agent will generally have “appointments” or contractual agreements with insurance companies that outline what policies can be sold and their share of the compensation from successful sales.
Policy buyers searching for a one-stop shop may find working with an insurance agent advantageous. Insurance agents can help buyers choose the appropriate coverage and enroll them in a binding policy. The ability to bind insurers into policy contracts is usually done directly inside the insurer’s underwriting system.
What Is an Insurance Broker?
An insurance broker is an insurance professional representing individuals or businesses looking to purchase insurance. Depending on the state, an insurance broker may have a fiduciary duty to customers, meaning they must act in their client’s best interests.
Insurance brokers are independent sales specialists who legally represent their buyers. Brokers work directly with their clients to find appropriate insurance plans to meet their needs and budget. To accomplish this, brokers will assess the person’s or company’s situation and level of risk exposure before recommending the best product.
Brokers generally work on commission or earn money from insurance providers. Commissions come from the premiums clients pay and may include additional earnings when clients renew their policies. This means that insurance brokers are generally motivated to find clients’ plans that they will be satisfied with long-term.
What are the Key Differences?
There are several important differences between insurance agents and insurance brokers, including the following:
- Insurance agents represent insurance companies, while insurance brokers represent their clients.
- Insurance agents sell insurance policies, while insurance brokers do not directly sell insurance. Instead, brokers work with clients to compare insurance rates for home, business, auto, and other types of insurance.
- Insurance agents are contracted or employed by insurance providers, while insurance brokers work independently on behalf of consumers.
- Insurance agents can help clients shop for insurance plans from one or multiple providers, while brokers can help clients shop and compare insurance plans from various providers.
- Insurance agents can enroll clients in coverage, while insurance brokers can secure insurance coverage through an agent.
- Insurance agents work on commission or salary, while insurance brokers work on commission from an insurer.
- Insurance agents are generally free for consumers, while insurance brokers are also free but may charge broker fees.
Should You Choose an Agent or Broker?
Both insurance agents and brokers can help get an individual or company the coverage it needs. Clients need to consider their unique needs when deciding between an agent and a broker.
Insurance brokers may be better suited for home or business owners with complex insurance needs or clients too busy to shop around for a plan. A broker can help clients compare different types of coverage across multiple companies and will undergo risk management processes to ensure that their clients are fully protected.
Insurance agents are better suited for clients that know which type of policy they want and do not require specialized coverage. Insurance agents have a solid understanding of the policies they sell and can thoroughly explain the terms of the policy to determine if it provides adequate coverage for the clients’ needs.
A broker may be the best fit if a client wants to see insurance plans and quotes from multiple companies. Insurance brokers can provide information and quotes from various companies. However, clients that know which company they want to purchase a plan from can benefit from using an agent who will walk them through the provider’s options.
Request an Insurance Quote
When deciding between an insurance agent and an insurance broker, clients should consider the role of each type of insurance seller and which would best serve their needs.
There are many aspects that clients should think about when choosing an insurance professional, such as the complexity of coverage they need, if they know which insurance company they want to purchase a plan from, and what unique risks they face as a home or business owner.
Atlas Insurance Agency offers clients an experienced team of insurance agents that understand the unique aspects of all industries and can tailor an insurance policy based on their personal or business needs. To learn more or to request an insurance quote, contact Atlas Insurance Agency at (808) 400-6634.