Insurance professionals with a high level of experience and education are accredited by insurance organizations and are allowed to sell insurance coverage policies to prospect clients. Accredited insurance professionals are broadly divided into insurance agents and insurance brokers.
Although little is known about the differences between agents and brokers, a thorough overview of their duties and tasks reveals that these insurance professionals have a lot in common, but are also fundamentally different.
Insurance Agents
Functioning as a liaison between the insurance company and the insured, insurance agents are responsible for the timely and accurate processing of any administrative work required. When the insured is interested in purchasing insurance coverage, the insurance agent does not conduct examination of the business and does not suggest the proper coverage. The business owner performs a risk assessment of the business and discusses all possible insurance policies with the insurance agent. The final decision is taken by the business owner, who should ensure insurance coverage of all possible risks associated with the business.
Insurance agents should process accurately any forms, premiums, and paperwork in order to ensure that insurance policies occur on time and that the insured gets the purchased coverage. In addition, an insurance agent is responsible for reminding to the insured about timely premium payments so that the coverage contract does not default.
Insurance agents are categorized into captive and independent agents.
Captive insurance agents work for only one insurance company and sell insurance policies of a particular insurer only. As they are committed to a particular insurance company, they are called “captive” in the sense that they are not allowed by law to sell the insurance policies of a competitor.
On the contrary, independent insurance agents work for a variety of different insurance companies and sell insurance policies from different insurers. Independent agents are allowed to compare the pros and the cons of all insurance policies, draft comparison charts and suggest the policy they consider most suitable for the specific needs of a prospect client who looks for insurance coverage.
Insurance Brokers
Insurance brokers are responsible for explaining all insurance policies to prospect clients and assist them in choosing the most appropriate insurance coverage depending on their needs. Insurance brokers possess a broker’s license and typically they are more experienced and possess higher education than insurance agents.
Unlike insurance agents, insurance brokers analyze a particular business in order to suggest the suitable coverage. The final decision is taken by the business owner, but the insurance broker has a high duty to guide the prospect client and do a lot more than pure administrative work. For their services, insurance brokers charge premium payments that are higher than those charged by insurance agents.
Typically, insurance brokers are advanced insurance agents who have been well educated and have advanced in their careers by acquiring management experience. By constantly attending business seminars and conferences, insurance brokers improve their knowledge and keep track on the current forces that drive the insurance industry as well as any future estimates.
In addition, insurance brokers are specialized in insurance products such as life, health, investments, home, auto and others. Particularly for those insurance brokers who wish to become specialized in investment insurance products, the law requires that they get special training and obtain special licenses from the Securities and Exchange Commission (SEC).