Insurance Broker Information
If you're not familiar with the different contractual arrangements between insurance companies and their representatives, it may be difficult to determine the most appropriate place from which to buy a policy. Understanding the position of agents and brokers can help you make an educated decision regarding how and where to seek assistance and advice for your next insurance purchase.
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Brokers Vs. Agents
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Brokers and agents are both licensed insurance producers, and are able to sell products that provide necessary coverage. Brokers and agents are held to the same industry standards and must comply with the state's registration and educational requirements to maintain a valid license, and both must be covered by an Errors & Omissions policy. The main difference between an insurance broker and an agent is the contract under which they may provide insurance products and their capacity as a carrier representative. Brokers are independently appointed with multiple insurance companies and are able to sell products offered by any provider. Agents, on the other hand, are referred to as "captive," and are appointed with only one insurance company, limiting the products they can sell to only those offered by their parent carrier.
Function
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The function of an insurance broker is to act as the intermediary between customers and insurance companies, and help prospective clients locate and choose the best insurance product for their situation. The ability of brokers to generate quotes and obtain specific information about policies from multiple carriers can provide customers with an easy way to evaluate and compare identical products side-by-side without the need to make multiple phone calls or engage in repetitive communications with several insurance companies.
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Types
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Every line of insurance, from automobile to life to commercial, can be purchased from brokers. Regardless of the type of insurance, the function and position of the broker is the same. However, not every insurance broker is able to provide every line of insurance. Each type requires a separate and unique certification from the state authorizing the broker to engage in the sale of that particular type of policy, and some brokers are only permitted to sell one or two types of products. This is not uncommon due to the wide range of insurance types and the complexity of the subject matter required to obtain additional insurance producer licenses.
Benefits
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The most obvious benefit to working with a broker is the ability to obtain products from a wide range of insurance carriers without the need to contact each one individually. Because brokers have arrangements with several insurance companies, there are no restrictions regarding what policies can be sold, and no requirements or quotas that must be met, alleviating the potential concern over an inappropriate or unnecessary sale.
Considerations
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Choosing to buy insurance from an independent broker or an employee agent can be a challenge because both types of producer-client relationships have their own pros and cons. Brokers can provide coverage from a wide array of carriers and have no bias toward one company or another. However, there is often a lack of in-depth knowledge regarding specific contractual questions and concerns that requires the broker to contact the insurance company for answers or clarification. This is typically not the case with captive insurance agents because the limited scope of their offerings results in a much greater familiarity with policy specifications, meaning less time waiting for answers to complicated questions.
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References
Resources
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Comments
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captil
Jan 18, 2011
...and yes, it's obvious you have written a "fake piece" hoping clients will do searches on the internet and read that "brokers are better than agents" and thus hire you. Sad... Agents work under brokers, so what the broker sells, the agent sells. Period. -
captil
Jan 18, 2011
Buddy, since when are "all Agents" captive? I am an Agent, working under a broker, and so I sell hundreds of products. Agents are only captive if they sign a captive agreement under individual carriers such as State Farm, New York Life, etc.
