What Is an Insurance Broker?
Whether you are purchasing life insurance, health insurance, auto insurance or home owner's insurance, it's important to work with an agent who is looking out for your best interests. When money is tight, it's even more important to find an agent who understands your situation and is willing to go the extra mile to find policies that fit your budget. An insurance broker is often the best choice for this.
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Who
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An insurance broker can be anyone who has completed the required training for obtaining a license in the state where he will be selling products. Brokers are licensed by the state and are required to complete continuing eduction courses throughout their career to keep up to date with changes in laws and practices.
Brokers Vs. Agents
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Insurance agents are typically employed by a single company, and are known as captive agents, and can only sell products for the company that issues their paychecks. Brokers are not captive agents. They can work with any insurance provider as an independent contractor selling and servicing policies of many different companies. Many brokers were once captive agents who found that working with one company limited the types of policies and the prices they were able to offer.
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Advantages
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Just as you comparison shop in the grocery store for the best price, brokers act in the same manner. Because they are able to write policies for a wide range of companies, they can help individuals find a policy that fits their needs. Working with a broker rather than a captive agent helps buyers save money. With a captive agent, the buyer is limited to only the premiums offered by one company.
Ethics
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Insurance brokers are bound by a strict code of ethics. They are always required to do what is best for their client, meaning they must analyze the client's financial situation to determine what type and what amount of coverage they need. Brokers must insure that they are not pressuring the client into purchasing more coverage then they need or can afford. Due to the nature of their work and the access they are given to clients' health and financial records, an insurance broker must maintain a professional demeanor and strict confidentiality.
Marketing
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Traditional insurance agents often work off a book of past clients in order to generate new business. By checking in with existing clients and getting referrals, they are able to write new policies. Brokers are more likely to generate business through cold calling or direct marketing. They market themselves through mailings, solicitation and word of mouth. Brokers have more freedom in the ways they market services than captive agents.
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