Insurance agent vs Broker
Insurance is a subject matter of solicitation. If you are looking for an insurance policy for your business, you need right advice and information. Normally this responsibility is fulfilled by a person who is either an insurance agent or a broker. You are not concerned with the terminology as long as you are getting the right information. Sometimes it becomes very confusing if it were to be asked to choose from an insurance agent and a broker. Both insurance agent as well as a broker brings business for an insurance company as they sell policies of the company to the people. If both are doing the same duty, why have different designations? The answer to this conundrum lies in the subtle differences between their functions, duties as well as obligations.
Insurance agent is the person who has been authorised by an insurance company to carry out its business on its behalf. This legal authority means the agent can sell the financial products of the company to the people by making a contract between a person and the company. An agent is not an employee of the insurance company which means that he is not on the payrolls of the company. He rather receives a commission from the company when he sells its financial products. He can be having other sources of income or could be doing other jobs. He disseminates information about the products of an insurance company and convinces people about the need of any insurance policy.
A broker works independently, and though he sells insurance policies, he is at best on the side of the client, not the insurance company. He is a qualified person as he passes the relevant course to obtain a license to work as a broker. He is a person who has knowledge of financial products of many companies in the market. He assesses the needs and requirements of a person or a business and helps him with just the right financial product. Brokers help businesses develop specific insurance plans for the employees and then find an insurance company that accepts the plan. Thus a broker matches clients with insurance companies.
Difference between Insurance Agent and Broker
When one looks superficially, an insurance agent and a broker look like identical as both of them appear to be selling insurance policies. The main difference between the two entities lies in the relation these persons have with the insurer and the insured. An insurance agent is designated by the insurance company to sell its product by convincing people and gets commission from the company whereas a broker matches the needs of a client with the products available with any of the insurance companies. Both however need a license to carry out their business in a state.
Businesses require custom made products to fulfil their needs such as employee benefits. Brokers are better suited to match their needs with insurance companies. This is why brokers are better suited for commercial insurances, whereas insurance agents are better suited for personal insurance.
Insurance agent is a person designated by an insurance company to sell their products.
Broker matches the needs of a client with the available product in the market; it can be with any insurance company.
A Broker is a qualified person, he has to pass certain courses to get the licence as a broker.
Both are paid commissions for their service.