When buying insurance, a dilemma that people face is choosing between an independent insurance broker and an agent. While both are licensed to help individuals and businessesget the right insurance plan, there are little differences in how they function.
In this article, we will help you understand the basic differences between an insurance broker and an agent.
What is an Insurance Agent?
An agent is licensed to hold and sell insurance plans from an insurance company against a commission. They help consumers compare different coverage plans & pricing and choose the right insurance that meets their needs. However, they typically represent the Charlotte insurance company they are selling the plan for.
There are two types of insurance agents –
- Captive agents: They represent only one insurance company, i.e. they sell insurance policies from a single insurer.
- Independent insurance agents: They typically sell policies from multiple insurers, giving more options to buyers to have the most suitable insurance plan.
An insurance agent has the license and expertise to perform an insurance transaction from start to end.
What is an Insurance Broker?
An insurance broker, on the other hand, represents the customers in their search for the right insurance policy that fulfills their needs. They will work closely with the customers to compare different coverage plans, terms & conditions, benefits, and price – and then suggest an insurance policy that is right for them.
Unlike an agent, an independent insurance broker represents the customer. They work more as an advisor, but do not have the authority to complete the transaction. They also cannot bind a coverage on behalf of the insurance company – they need to manage the account and complete the sale through the insurer or an insurance agent.
The below table will help you understand the basic differences between an agent and an insurance broker:
|
Parameters |
Insurance Agent |
Insurance Broker |
|
Whom they represent |
An insurance company |
The customer, i.e. you |
|
What is their role |
Offers plans available with one/multiple insurers with whom they operate. They perform accurate processing of premiums, paperwork, and forms |
They function as an advisor, helping you choose the right plan and pricing by comparing different insurers and their products |
|
Benefits |
Independent insurance agencies can help compare multiple products and pricing. They are also licensed to process and close the sell |
They provide information about multiple insurance plans and help you compare to find the right policy. A broker does not have the authority to bind coverage or sell the product |
Conclusion
Whether you choose to partner with an insurance agent or a broker, they both work on a commission system. Determine how they operate, variety of products, their experience, and competitive pricing they can offer. This will help you make a wise choice.
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