What’s the Difference Between Insurance Agents and Insurance Brokers?

We’re pretty sure you must’ve come across these two terms i.e., “insurance agent” and “insurance broker” while searching for different kinds of policies available in the insurance market. These two terms are often confused to carry the same meaning, but they actually have different meanings within the insurance industry.

In this article, we will discuss these two professions in the insurance industry and how agents and brokers can help insurance buyers and providers. You will be able to learn when to visit an insurance agent or insurance broker based on your requirements.

The Need for Insurance Agents and Insurance Brokers

The insurance industry is an essential part of the modern society. It provides financial protection from losses incurred due to accidents, theft and other unfortunate situations to the individuals, businesses, and other organizations. 

An insurance policy transfers some of the financial risk of an event from the insured or policyholder to the insurer or the insurance company. When an event covered under the insurance policy occurs, the insurer agrees to pay claims in exchange for a premium. A predetermined limit comes with such claims.

The insurance sector helps individuals and businesses to manage their financial risks. However, purchasing insurance can be a bit of a complicated process.

An insurance buyer might need help when it comes to the following things:

• Learning how deductibles work (the amount paid by the buyer before insurance coverage kicks in)
• Understanding the terms and conditions of the coverage (things which are covered or not covered under a policy)
• Claim process which involves filling out forms, providing documents and working with claim representatives to meet other requirements.
• Understanding all the different plan options available for certain needs
• Understanding the policies and procedures of the insurance companies
• Understanding complex words in the policies

Insurance policy buyers are sometimes in a conundrum due to so many insurance options available in the market and may require guidance on which policy would be the best for them. Luckily, both insurance agents and insurance brokers can help such insurance policy buyers. Now, let’s discuss the roles of both of these professions.

What is the role of an Insurance Agent?

An insurance agent is a professional who sells insurance policies while keeping in mind the interests of insurance companies he works for. An insurance agent can be someone that works independently or working with one or more than one insurance company. He can be working as a company representative a.k.a captive agent and sell the insurance company’s products to the customers. Generally, the insurance agents have the access to the product portfolios of different insurance companies so that they can guide customers in finding the policy which would suit their needs the most.

Even though an insurance agent works for the insurance company or companies and customers would expect him to only speak good about the policies, such is not the case. He will give the customers personalized advice and tell them which policy or plan would be the best for them. For this, he will take the required time to get to know the customers and their needs, medical history, etc. before recommending any policy straight away and he will be available to answer all the questions and concerns that the customers may have regarding the insurance policies.

Insurance agents also responsibly guide the customers during the paperwork process for securing the insurance policy and help customers fill out necessary details in forms. In case a customer feels confused about the terms and conditions, they can ask the insurance agent to explain it to them (but even then it’s the customer’s responsibility to ask for any doubts or clarifications before signing any documents). These agents are also generally permitted to complete the insurance sales transaction and bind coverage.

Now that you’ve skimmed through the role of an insurance agent, it’s time to discuss the role of an insurance broker.

What is the role of an Insurance Broker?

An insurance broker is a professional who works independently. He helps to find the appropriate insurance policy for the customers and represents the interests of the customers only. He doesn’t work as an employee under any insurance company. He acts as an advisor who works with many different carriers in order to help figure out the most ideal coverage as per the customer’s requirements, budget, etc.

We know that the insurance agents must get salary and incentives from insurance companies when they sell policies successfully. Now the question is, what benefit does an insurance broker get out of helping a customer in selecting their insurance policy? Well, the insurance brokers work on a commission basis and they are paid a fee for recommending and finding a policy which ultimately gets purchased by the customer. 

Like insurance agents, insurance brokers also take the time to get to know the customers requirements before recommending the policy best for them. But unlike insurance agents, the insurance brokers do not process the paperwork which is associated with securing the policy and they also do not bind coverage. The primary responsibility of an insurance broker is offering advice and guidance on policy. Since he does not work for a particular insurance company, he may not promote it with a motive of getting any salary or incentives from such company. When it comes to the paperwork process, the entire responsibility is on the customer and not the insurance broker.

Insurance Agent vs. Insurance Broker: the Main Differences

Whether you go to an insurance agent or insurance broker, both of them can make buying easier. Insurance agents are the representatives of an insurance company while insurance brokers are the representatives of the buyers. An insurance agent is generally associated with one or more insurance companies and sells policies on behalf of those insurance companies. Insurance agents have the permission to complete the insurance transaction and bind coverage as opposed to the insurance brokers. The insurance brokers don’t have any contractual obligation to any one insurance company due to which they may be more flexible in assisting the customers to find the policy which suits their needs the most. The insurance broker may help the customers secure coverage through an insurance agent.

Conclusion

As a customer, if your main goal is to shop around through different providers’ policies to find the one that’s the right kind of policy and the right amount of coverage, you should opt for an insurance broker. An insurance broker will assist you in comparing different kinds of coverages across different insurance companies. If you’re already aware of the policy you want, you can go for an insurance agent who can easily sign you up with no need to compare policies. An insurance agent can enroll you in binding coverage himself easily. If you need further assistance regarding insurance policies, you can get in touch with Registrationwala. Our insurance experts have years of experience and can guide you in the best way possible.

Author: Dushyant Sharma

Hey there, I'm Dushyant Sharma. With the extensive knowledge I've gained in past 8 years, I have been creating content on various subjects such as banking, insurance, telecom, and all the important registration and licensing processes for various companies. I'm here to help everyone with my expertise in these areas through my articles.