insurance broker and insurance agent

What is the difference between an insurance broker and an insurance agent?

The primary difference between an insurance broker and an insurance agent lies in their roles, responsibilities, and the parties they represent.

Insurance Broker:

• Role and Independence: Insurance brokers act as intermediaries between clients and insurance companies. They work independently and are not tied to any particular insurer. This independence allows brokers to shop around and find the best policies from multiple insurance companies to meet their clients’ specific needs.
• Client Representation: Brokers primarily represent the clients, focusing on finding the most suitable insurance options tailored to the clients’ requirements. They offer advice on various policies and help clients understand the complexities of insurance coverage.
• Compensation: insurance broker earn their income through commissions paid by the insurance companies for the policies they sell. They may also charge fees for their services directly to clients.

Insurance Agent:

• Role and Affiliation: Insurance agents, on the other hand, represent one or more insurance companies. There are two types of agents: captive agents, who work for a single insurer, and independent agents, who can sell policies from multiple insurers but are still tied to those companies.
• Company Representation: Agents primarily represent the insurance companies they are affiliated with. Their main goal is to sell the policies offered by these companies, ensuring that the coverage aligns with the company’s offerings.
• Compensation: Similar to brokers, agents earn commissions from the insurance companies they represent. Captive agents may also receive a salary or additional benefits from their employer.

In summary, the key distinction is that brokers represent the clients and have the freedom to choose from a wide range of insurance products across various companies, while agents represent specific insurance companies and sell products from those companies​