At first glance, insurance brokers and insurance agents seem very similar. However, when you take a closer look at the professions, you’ll see they’re quite different in what they offer.
What is an Insurance Agent?
An insurance agent is an employee of an insurance company. He or she is expected to understand the ins and outs of every insurance plan that particular company offers. An insurance agent will talk to prospective clients, explain details of the insurance plan, and work with the clients to get them coverage.
These agents also have a more restricted relationship with a particular insurer. What does that mean? Insurance agents have a contract with the insurance company. This contract covers details of the policies they can sell and the commission they will earn.
What is an Insurance Broker?
So what is an insurance broker? What exactly do insurance brokers do? Insurance brokers are similar to insurance agents in that they also connect people with appropriate insurance policies. However, they don’t work for any particular insurance company. Instead, brokers have relationships with multiple insurance companies in the area. They may be able to offer dozens of potential plans to clients. Like agents, brokers need to understand and follow state and national laws regarding insurance.
Brokers vs Agents
So what are some things that a broker can do but an agent isn’t able to?
First, they have more flexibility in the policies they can offer. There may be four or five on hand which would fit the client’s needs and price range. This allows them to offer a policy that works best for that client.
Secondly, since insurance agents are employed by one company, there are limits to how they can assist. If rates are increased or there is another issue, all an agent typically can do is lower coverage or raise the deductible. In both cases, this isn’t an ideal solution. Less coverage means less protection, and a higher deductible means more out of the client’s pockets. In contrast, insurance brokers can simply offer another policy that is a better fit.
Third, brokers typically have a relationship with all the major providers in the area. In smaller regional markets, competition may be extremely high. This gives the broker leverage to negotiate the best deal for their clients. Brokers will also be more likely to help with unusual cases or needs because they have such a wide variety of plans available.
Insurance Broker Licensing Exams
Now that you’ve learned more about insurance brokers, are you interested in taking the next step to becoming one? At America’s Professor, we offer training so you can prepare for your licensing exams. Contact us today to find out more.