Difference Between Insurance Agent vs Insurance Broker
In the Insurance market, the terms ‘broker and ‘agents’ are interchangeably used. The agents and brokers both should have the appropriate licenses and act as intermediaries between the insurance companies and the insurance policy buyers.
Let us understand these better. An insurance broker represents multiple insurance companies to offer a selective and personalized option for their customer. They are not appointed by an insurance company. On the other hand, an insurance agent, who are mostly captive agents, are connected to only one company and hence, sells products of that one company only.
However, Insurance Agent vs Insurance Broker both have some other primary differences, majorly in terms of their job roles and parties they represent, discussed below.
Head To Head Comparison Between Insurance Agent vs Insurance Broker (Infographics)
Below is the top 11 difference between Insurance Agent vs Insurance Broker
Key Differences Between Insurance Agent vs Insurance Broker
Both Insurance Agent vs Insurance Broker are popular choices in the market; let us discuss some of the major Difference Between Insurance Agent vs Insurance Broker
- Insurance agents represent the Insurance Company and would provide information only for the same company to any prospective buyer. They understand the company they are associated with very deeply. Insurance brokers represent Insurance buyers and provide information from multiple Insurance companies to ensure the right insurance plan for the buyer.
- Products offered by the agents are that of the insurance company only for whom they are the employees. They are more responsible towards the paperwork required after any plan is sold, processing of the forms and the premiums. On the other hand, brokers choose to be more involved in knowing your requirement and getting you the best possible policy available among different insurance companies and products.
- An insurance agent can usually represent a maximum of 1 of each of these – life insurance, general insurance, and health insurance. They also do not have access to all the policies from all the insurance vendors. While, a broker can fetch you information for the companies and insurance plans available, and does not limit him. The broker is also equipped enough to further give you more details if more than 1 type of insurance is what you would need.
- Since brokers need to identify the best insurance contracts for their clients’ specific needs, they are obliged to assess their business / financial need and situation for the best available. To do this they need to assess all possible unique insurance situations and have a piece of useful and in-depth knowledge about the market and the products it offers. Because of this additional seeking quality, insurance brokers charge the administrative and premium fees (which includes a percentage of their commission) higher than the insurance agents. Some companies also pay salary to their captive agents as they are treated as an employee to them.
Insurance Agent vs Insurance Broker Comparison Table
Below is the 11 topmost comparison between Insurance Agent vs Insurance Broker
|The Basic comparison between Insurance Agent vs Insurance Broker||
|Representation||Represents only one Insurance Company||Represents Multiple Insurance Companies for the Prospective Insurance buyer|
|Appointment||Appointed by the Insurance Companies||Selected by buyers, after careful and informed scrutiny from a pool of brokers|
|Types||2 types – Independent and Captive||2 types – Retail or Wholesale|
|Number of companies||It represents only 1 company. Sometimes it might fetch data from multiple companies, as needed.||Represent by extracting plans and policy documents from multiple, but relevant, insurance companies to the buyer.|
|Recommendation||Recommendations are biased towards the company it represents.||Recommendations are in favor of the buyer.|
|Expertise||Agents may or may not have the experience and expertise to advise you the best policy in your given situation. They are known to represent the insurer and not the businesses they are in.||Brokers develop the qualifications that are needed to recommend the best suitable policy out of the many. They would be very good in terms of the experience offered.|
|Motive||Profit – making: they try to sell those products of the company which help them earn the highest individual profits.||The broker does not get anything additional for a specific range of products.|
|Disclosure||No disclosure of the rate of commission or any additional fees charged to the customers.||Required to provide full disclosure on the commission rates to be earned from the sale to any customer. The percentage of the premium asked that will go in earning in commission is necessarily important to be disclosed.|
|Obligation||The customer needs to get the groundwork of researching the data and facts of the company and the policy being offered.||The obligation of the accuracy of the facts and other details lies with the broker. They can be sued in case any information provided to the customer does not match.|
|Support Quality||Back office support is better as they have an entity to back upon.||Highly personalized service is offered which gives better quality support.|
|Weakness||Agents cannot provide you with the best policy as they do not navigate through the multiple options in the market.||Brokers do not upgrade themselves with any change or updates in a given policy.|
The choice to be made between an agent and a broker should be decided based on your requirement. If you have a product or the company offering it in your mind, then it is suggested you should go with the captive agents.
4.9 (3,296 ratings)
On the other hand, if you wish to have a quick idea about the wide array of products available in the market and need help in deciding based on your requirements, an insurance broker is to be selected.
Some companies also sell insurance policies directly to the needful buyers, without having any intermediaries like the agents or brokers. Such insurers are known as ‘direct writers’, who focus more on the specific requirements like car insurance coverage.
However, there are more important things to bear in mind in selecting an insurance plan – cost, speed, ease, security of your personal data and the satisfaction and peace of your mind, which comes with the in-depth knowledge which these intermediaries can provide. How you are keen and cautious in selecting a plan, you need to make efforts and have complete information when you are selecting an agent or broker.
This has a been a guide to the top difference between Insurance Agent vs Insurance Broker. Here we also discuss the Insurance Agent vs Insurance Broker key differences with infographics, and comparison table. You may also have a look at the following articles to learn more –
- Asset Purchase vs Stock Purchase – Top Comparisons
- Variance vs Standard Deviation
- Dividends EX-Date vs Record Date
- Sales and Marketing – Which One Is Better
All in One Financial Analyst Bundle (250+ Courses, 40+ Projects)
250+ Online Courses
Investment Banking Training (with 25+ Projects)
Financial Modeling Training (with 15+ Projects)
Equity Research Training Course (with 6+ Projects)
Project Finance Course
Business Valuation Course (with 10+ Projects)