Definition of Insurance Brokerage

People often use an insurance broker to purchase their insurance. They may not understand, however, what an insurance brokerage actually is and how it is different from purchasing insurance directly from an insurance company.

Definition

A broker is someone who acts as a mediator between a buyer and a seller. Insurance brokerage refers to the mediation of an insurance sale. An insurance broker works to bring together the buyer and the seller in order to make a sale happen.

Misconceptions

Insurance agents do not engage in insurance brokerage. An agent does not act as an intermediary but is a representative of an insurance company whose job it is to sell insurance policies.

Benefits

Insurance brokerage can be beneficial to consumers because it gives them access to several competing insurance companies, rather than an individual insurer.

References

• All Business: What is an insurance broker?
• Insurance Brokers Association Ontario: The Broker Advantage