Insurance Broker and Insurance Agent Differences
An insurance broker is a self-employed entity that works for itself rather than an insurance company, working for their clients to obtain insurance by finding the best plan as per their needs and earns commission whereas an insurance agent is the one that helps a client to obtain best-fit insurance policy as per their expectations and needs while helping an insurance company to gather and expand its business by obtaining cliental by contracting with potential customers.
Insurance agents and brokers are generally used as a common word for a person selling insurance policies to the customers. Although both sell insurance products and earn a commission based on the sales there are some differences in how the industry perceives the two.
- An insurance agent acts as an intermediary between the insurance company and the customer and sells a variety of insurance products such as health insurance, auto insurance, life insurance, etc. whereas insurance broker sells and negotiates the insurance compensation on behalf of the customer and acts as an independent party between the insurance company and the customer.
- A broker has a higher responsibility towards the customer to provide the best financial product which suits the needs of the customer.
Insurance Agent vs Broker Infographics
Let’s see the top differences between insurance agent vs broker.
The key differences are as follows –
- An insurance agent represents one particular company whereas brokers represent the customer
- Insurance agent sells a product of one insurance company only whereas brokers sell products of different companies.
- Insurance agents try to build the image of the company they work with however brokers try to sell the best product available that suits the client’s needs irrespective of the company.
- Insurance agents receive in-house training from the company they work for whereas brokers gain knowledge from external courses and experience after working in the field.
- The insurance company is accountable for the products sold by their agents; the broker is accountable to the client – he should sell the product which best suits the need of the customer.
- Insurance agents have in-depth knowledge of the products sold by their company however they gain some knowledge about the products of the competitor companies for better sales and comparison. Brokers have the knowledge and they are supposed to have knowledge about a wide range of products since they have the responsibility to provide the best product available to the client.
- Commission of insurance agents is usually higher than the brokers and they may receive performance bonuses based on their sales from the company they work for. Commission earned by brokers is comparatively lesser than the insurance agents.
- Insurance agents have usually stable compensation whereas the income earned by brokers may vary month on month
- Agents have a small customer base as they are limited to one company while brokers usually have a higher customer base.
- Agents can provide personalized service to the customers as the customer base is small however brokers might not be able to provide personalized services due to the higher customer base.
Insurance Agent vs Broker Comparative Table
|Basis of Comparison||Insurance Agent||Insurance Broker|
|Representation||Insurance agents sell products of only one company and also try to boost up the image of the company so as to sell more products in the process of image building.||The broker does not have allegiance towards one company, they sell products belonging to different companies and try to sell the best available product that suits the clients’ needs.|
|Training||Insurance agents receive training from the company they represent.||Brokers are not trained by Company but they self-train themselves from various external courses and experiences.|
|Accountability||Insurance company which the agent represents is accountable for the actions of the agent.||They are accountable to the customer as they work on behalf of the customer to provide them with the best product.|
|Knowledge||Insurance agents have in-depth knowledge of the products of the Company they represent. However, they attain knowledge about the products of the competitor companies so they can compare them with the products they are selling.||Brokers have knowledge about various products sold by various companies. They are responsible for the information provided to the customers, hence they should be well versed about the product before selling or offering to the customer.|
|Compensation||The commission earned by agents is generally higher than the brokers. Since they work for one Company, they may usually have a stable income with extra bonuses/compensation based on the agent’s performance.||Brokers earn commissions from the product they sell which are generally less than the agent’s commission. They have a responsibility to disclose to the customers that the products sold by them earn them the commission. Brokers usually have variable income based on the sale of the product.|
|Services provided||Agents have a limited customer base hence they can provide personalized service to the customers. Also, the amount of service depends on the company for which they work and sell the products.||Brokers give good service because they have knowledge of numerous products available in the market however, due to the wide customer base they might not be able to provide personalized customer service after the sale.|
|Business volume||The business volume for insurance agents is usually limited due to the limited customer base and as they sell products from only one Company.||Brokers have a higher business volume as they deal with multiple products of various Companies.|
Insurance agents and brokers both act as an intermediary between the insurance company and the customers. While both earn from the commissions from the sale of the products however, there are major differences between them which are highlighted in the article. Both have their own targets/agendas to meet and to earn a higher commission, however, it is their responsibility to give good service and provide the best product which suits the customers need.
This has been a guide to the Insurance Broker vs Insurance Agent. Here we discuss the top differences between insurance agent and broker along with infographics and comparison table. You may also have a look at the following articles –