What's the Difference Between an Insurance Broker and an Agent?

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What's the Difference Between an Insurance Broker and an Agent?

While buying insurance, clients seek help from insurance professionals to get the best coverage at the right price. However, the type of insurance professional you are hiring can make a difference. 

Anyone outside the insurance industry cannot easily differentiate between an insurance agent and an insurance broker. People use these words interchangeably without knowing the actual difference. Here in this article, you will get all the details to make the right insurance decision.

Who is an Insurance Agent?

An insurance agent is a representative of an insurance company who sells insurance products on their behalf. The agent helps consumers to select the right insurance product based on their needs as the representative of a company. 

An insurance agent gets hired on a salary basis in a company and gets extra compensation based on performance. However, the agent has to take the mandatory training of 15 hours provided by IRDA.

Types of Insurance Agents

Overall there are two types of insurance agents:

1. Independent Agents

Independent agents work with multiple companies and because of that, they can offer a wide range of insurance products. This means they have a wide range of offers for clients as compared to captive agents. 

Independent agents receive a commission from every company for their services. They can quote and issue insurance policies on behalf of the insurer(s). Other than the systems of insurers, an agent can offer other services such as claim support, review of the policy, and advice to clients. Independent agents are similar to insurance brokers because they connect with multiple insurers.

2.Captive Agents

Captive agents are the ones who sell insurance policies of one company, they work on a contract or full-time basis. They don’t get a commission because the company hired them on a salary basis. As operational support, they receive office or administrative staff from the company. 

They get potential clients and referrals from the insurer as well. Captive agents have all the information about the company’s product because they are representing one company only. Therefore, they can provide up-to-date information on insurance policies.

Who is an Insurance Broker?

An insurance broker represents consumers, not insurance companies. Brokers who have an Insurance broking license can sell every insurance type, health insurance, life insurance, and general insurance. They also share information with clients that is beyond the understanding of a layman. Finding the right type of policy requires research and an insurance broker will help the client find the right policy as per the needs. An insurance broker must have a license approved by the IRDAI to provide insurance services to clients.

Types of Insurance Brokers

The following are the types of insurance brokers:

1. Retail Brokers 

A retail broker works closely with clients from finding the right insurance to purchase either from the insurance company or a wholesale broker. A retail broker mainly works with general policies which are less complex, and cover common risks.

2. Wholesale Brokers

Wholesale brokers sell insurance products to retail brokers as well as insurance agents. A wholesale broker doesn’t work with clients on the base level and even there is no need to understand the requirements of clients from the base level. As insurance agents and retail brokers, work directly with clients they transfer the requirements to wholesale brokers and they offer a product accordingly. 

3. Surplus Line Broker

When the insurance needs of a client are greater than the standard insurance market, then they reach surplus line brokers. A surplus line broker can be a retailer or wholesaler. Clients need this type of specialized policy when their business operates in a risky complex and requires insurance that no other standard policy is providing. In this case, a surplus line broker is the best way to get the policy as per the needs. 

Difference Between Broker and Agent in Insurance

The following table shows the major difference between an insurance broker and an insurance agent:

Conclusion

Both insurance agents and brokers can be equally helpful, whether you go with an agent or broker. Insurance brokers might be helpful for companies that have complex insurance needs. On the other hand, if your business does not need any specialized coverage then you can go with an insurance agent as well.

At Registrationwala, we help you get the insurance broker license quickly without any hassle. Connect with our experts to get the best advice from application to final submission. After connecting with us, you get:

• Professional license registration support
• Quick license approval
• A team of industry experts, and 
• Peace of mind.

So, connect with our experts to get the best advice on insurance broker license.

People also Read: Choosing the Right Insurance Broker: Key Factors to Consider

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