Difference between Insurance Brokers and Agents – An Overview
Knowing the difference between insurance brokers and agents is very important to understand how you as an insurance holder can make the best use of their services to purchase other financial requirements and a new insurance policy. Both insurance brokers and agents are professional in the insurance industry, and they act as intermediaries between insurers and insurance buyers. They also have the proper licenses to distribute the insurance they are selling while also following laws or regulations obligatory by local insurance departments. The key difference between insurance brokers and agents is that an insurance broker represents the insurance buyer while an insurance agent represents one or more insurance companies or agencies. Scroll down to check the difference between insurance brokers and agents.
Who is an Insurance Broker?
Insurance brokers focus on risk management and insurance. Insurance brokers work for you only rather than insurance agencies or companies. A broker uses his experience and knowledge to help you consider your insurance needs, find the perfect coverage & value and can help you when making an insurance claim. Insurance brokers work openly with insurance buyers, and you can rest assured that a professional expert is always available to receive your calls and answer all of your questions related to insurance.
Insurance brokers perform a surplus of duties for businesses and individuals searching for the right insurance for them. When you call an insurance broker for questions, he or she will acquire some information and evaluate your requirements. A broker will compare the coverage of various insurers to get you the best rates and conditions. An insurance broker will also hunt for multiple opportunities to combine different insurance types to get some discounts. As you know that insurance brokers do not work for the insurance agencies or companies, their recommendations are unbiased and always in favor of the insurance buyer.
Insurance can be a difficult concept, and it is not always easy to understand. As we already know, we need insurance to protect our house, car, health and ensure that our family or our loved ones are protected, the better details often become unclear. A broker can help you navigate the process of comparing, searching, and obtaining insurance by breaking it down into terms and conditions. Having an experienced and knowledgeable insurance broker represent you is also the best way to protect yourself and your business.
Who is an Insurance Agent?
An insurance agent is referred to as “captive agents, and it represents only one insurance company. An insurance broker represents multiple insurance companies to make sure that you are connected with the right insurance for you. An insurance agent acts as a channel to provide information to insurance buyers. The buyer can choose from available policies and contracts are decided through prescribed agreements that the agents have with the insurers to meet definite guidelines.
Some insurance agents in India will compare insurance policies from multiple dealers (such as independent agents). This doesn’t mean that the insurance agent has access to all of the dealer’s policies. An agent signifies insurers, they may or may not have the experience and knowledge required to advise you regarding the suitable insurance policy for your specific situation. Whereas an independent insurance agent may offer your multiple choices as they work with numerous companies opposing your business, they only sell the policies options that will provide them with significant profits. Always remember the difference between insurance brokers and agents when choosing between an agent and a broker.
What is the Key Difference between Insurance Brokers and Agents?
Following table highlights the key difference between insurance brokers and agents:
|Key Points||Insurance Agents||Insurance Brokers|
|Representation||An insurance agent represents only one insurance company, and they sell products to the buyers in the company’s listing. Also, to sell policies, insurance agents also emphasise improving the company’s brand image they represent.||An insurance broker sells insurance policies belonging to different insurance companies in the market. They don’t have any commitment to a specific company and sell products based on the customer’s requirements.|
|Business Volume||For insurance agents, the business volume is limited since they deal with one company’s product.||Insurance brokers have access to many insurance products in the market, and their business volume is much higher.|
|Knowledge||Insurance agents have detailed knowledge of the products offered by their own company, and they are not required to know about all products in the market, and they may have some information about the products of their opponents just for product comparison.||They are required to know various products in the market and are bound to explain multiple products that seem perfect for a customer’s requirement. It is compulsory for insurance brokers to know about various products.|
|Training||As you know, an insurance agent represents only one company, they receive in-house training for their respective company.||Insurance brokers are not trained by any particular insurance companies, they sell a wide range of products to the customers. These are external courses that brokers can take before they begin selling insurance products.|
|Accountability||An insurance company is responsible for the actions of its insurance agents. IRDAI or Insurance Regulatory and Development Authority has the right to punish an insurance company for any misconducts or illegal activity by its agents.||Insurance brokers have huge accountability as they are not backed by any particular insurance company. Insurance brokers are bound to offer multiple products to their customers and reveal the prices of the products. Insurance brokers can get charged for any false information they provide to their customers.|
|Licensing||Agents who have trained must attain a license as per the regulations offered by IRDAI (Insurance Regulatory and Development Authority).||Brokers must be license by the Insurance Regulatory and Development Authority in order to function in the market. They are expected to meet a certain level of business regulations before they can get the broker license.|
|Compensation||The commissions for agents are higher than that of insurance brokers. The income earned by insurance agents is relatively stable as they offer service under one company. Companies may pay some additional compensation based on the agent’s performance.||Insurance brokers sell multiple products, and commissions are based on the product sale. Brokers must recommend their customers about the various products they sell and charge a fee from the companies. Based on the types of insurance policies sold, brokers could experience variations in their income.|
According to the IRDAI regulations, insurance brokers and agents have a moral duty not to misrepresent anything to their customers. So it is necessary to know the basic difference between insurance brokers and agents before choosing any policies. However, their main focus should be helping clients access the right products, and both insurance brokers and agents indeed have their agenda with regard to meeting targets and deadlines. In case if you want more information regarding the same, please contact Swarit Advisors.
Also, Read: How Does an Insurance Broker Makes Money?