For the average consumer in need of an insurance policy, regardless of the coverage type, the task of researching and obtaining appropriate coverage can be extremely overwhelming, especially when that consumer has no existing relationship with an insurance professional. To make things even more difficult, the number of companies and organizations that promote their services and offer assistance is staggering.
So, how should the average consumer decide which company or agency to do business with? Even though there are countless industry professionals just dying to solicit your business, and many of them with a ridiculous string of acronyms lining their business cards, it’s important to determine whether or not you are talking with an insurance “agent” or an insurance “broker”. The difference between the two is extremely simple to understand, yet can have a significant impact on both the quality and price of the policy you purchase.
Insurance Agents are also commonly referred to in the industry as “captive agents”. This means that they have contracted with one specific insurance company and are therefore unable to provide you with products outside that company’s portfolio. Insurance Brokers, on the other hand, are independent in their relationships and therefore able to obtain the products of multiple insurance companies. Both of these categories of representation have their pros and cons, and the following is a short list of things to consider before committing to any one agent or company:
1. Agents are usually much more informed regarding the specific features and benefits of the insurance policies they offer, simply because their choices are limited and they will therefore become more intimately familiar with their company’s products. Conversely, since brokers are able to provide products from several insurance carriers, they are typically much less aware of the specific features of one company’s policies as compared to the next.
2. Considering the previous statement, it is also very easy to see why Brokers are often described as having poor customer service for their existing clients; in the event of a question or concern, the Insurance Broker will typically be forced to contact the company providing the policy in question, wait for a response with the answer, and respond to the customer’s initial inquiry. Agents, on the other hand, are usually able to locate answers to questions almost instantly because they should know exactly who to call and in what department. This observation results in a much slower problem-solving process for the Brokers, which can translate into a lower overall client satisfaction percentage.
3. Agents will also commonly possess more advanced software systems and customer service tools because the majority of these tools are provided by the insurance company they represent. Agents have the complete support of their company. Brokers, however, are usually left to purchase their own client management systems and tools because the insurance companies are often unwilling to adequately support the brokers due to a lack of exclusivity.
Overall, remember that both Agents and Brokers can assist you in obtaining the insurance coverage you need. Regardless of your choice, it’s important to closely examine the credentials and industry relationships of the Agent or Broker from whom you are considering purchasing a policy.