insurance brokers vs agents

When you shop for insurance, you will likely come across both insurance brokers and insurance agents. If you are unfamiliar with the disciplines, you might believe the two professionals regularly do battle – insurance brokers vs agents. So whats the difference?

Whats the Same?

Both brokers and agents work as intermediaries between the insurer and the insured. They are bound by law to help you find the right insurance policy that fits your need. They must also ensure that it is available at a reasonable price. Agents and brokers must be licensed to sell insurance and must obey the regulations set forth by the states in which they do business.

Whats the Difference?

The biggest difference between brokers and agents is who they represent. Brokers represent the insurance buyer – you or your organization. Agents represent insurance companies.

Agents come in two types, captive or independent. Captive agents represent one insurer, while independents represent multiple insurers. They are joined with the insurer by contract, which identifies the policies and products the agent can sell and outlines the commission the agent will make.

Brokers, on the other hand, submit a buyers completed application to various insurers requesting a quote. You will likely work with either a retail or wholesale broker. Retail brokers work directly with buyers. Wholesale brokers work with retail brokers to help find coverage for buyers who couldnt obtain coverage otherwise.