An insurance broker (individual or entity) solicits, sells, or negotiates insurance contracts to individuals or businesses. Insurance brokers typically help individuals or businesses find and purchase car insurance, home insurance, business insurance, and certain investment products.
Insurance brokers are regulated by the states in which they do business, and must obtain the licenses required by individual states. Insurance brokers represent buyers in insurance transactions. Their job is to survey the market, get quotes, and share options for customers to choose from.
Insurance agents represent insurance companies. They act as sales representatives for insurers and are typically paid commissions for sales. Insurance brokers represent buyers. Brokers study the market, get quotes, and share options for clients to choose from.
Insurance agents work with the insurance companies they represent. This means that agents can initiate insurance contracts, or secure coverage, on behalf of insurance companies, and the companies must honor those contracts. Insurance brokers submit applications to insurance companies on behalf of their clients, but do not have the authority to enforce or write coverage.
Both agents and brokers are paid commissions or fees by insurance companies. Insurance brokers must disclose their fees to their customers, and the customers must give permission for brokers to collect those fees.
Your personal preferences and unique needs will help you decide whether you need to use an agent or broker to purchase insurance. Some reasons you might use a broker include:
Brokers do all the research for you, finding insurance companies and policies that fit your needs and budget.
Brokers can provide access to policies from numerous insurance companies, and can offer you multiple options with different price points.
By comparing multiple quotes, you may be able to find the same or better coverage at a lower cost.
Brokers are licensed and educated professionals who provide the advice you need to make the best choice.
An insurance broker can most likely provide for all of your insurance needs — from home and car insurance, to life insurance, health insurance, and more.
Both agents and brokers are paid commissions on the policies they sell. Sometimes brokers charge an additional administrative fee, but this will be disclosed to you.
Insurance agents might be able to provide less expensive policies, but not always. Brokers can research the market to find a variety of options at different price points from which you can choose.
Insurance brokers work for their customers, whether they are individuals or businesses. They research the market for suitable options, share those options with their clients, and help them apply for and purchase coverage from insurance companies.
Brokers often provide additional services, such as helping clients assess risks, providing general insurance consultation, providing regulatory and legislative information, providing claims assistance, and even helping employees enroll in health plans and resolve employee benefits issues.
Brokers often do not have contractual obligations to insurance carriers and therefore have greater ability than agents to negotiate individual contracts.
The Irish Central Bank regulates the activities of Irish Insurance Brokers, and The Financial Conduct Authority in the UK
Insurance brokers can be retail brokers or wholesale brokers. Retail brokers are those who interact directly with businesses or individual clients. Sometimes, certain types of coverage are not available to retail brokers. If you need certain types of specialized coverage that your broker cannot obtain, they can work with a wholesale broker who has access to additional markets and products.
Wholesale agents typically have additional expertise and access to markets that retail brokers do not. They work directly with retail brokers and insurance companies to write policies for unusual or hard-to-place risks, while retail brokers typically retain contact with customers.
If you need a wholesale insurance broker for your high-risk or unique insurance needs, a retail insurance broker can find one for you.