Anybody who produces sales of insurance products is a Producer or Insurance Agent. But based on their mode of working, they can be classified into different types.
Independent Insurance Producers
Independent Insurance Producers are not bound to selling insurance products of a single insurance company. They generally sell insurance products of several insurance companies and get commission for each sale from the insurance company. They figure out the best product for their client irrespective of the insurance company and suggest the same. At renewal time also they look for the best option for their client and may switch the policy to another insurance company in case it provides more benefits to the client.
Exclusive Producers or captive producers represent a single insurance company. They have an agency relationship with the company. They are also referred to as “career agents” and their personal or partnership firm is called as career agency. Mostly they make money with commissions from career (first-year commissions and renewal commissions in the subsequent years). A producer can also grow his business and employ many other producers under him within a geographical area. In this case he is called as Managing General Agent (MGA). In this case he makes money from commissions earned by himself as well as commission overrides or overriding commissions which means the commission paid by career for insurance done by producers under MGA.
Direct Writing Insurance Companies
Direct Writing Insurance Companies are careers who have their own employees selling their policies. They are employees not agents, generally they get salary not commissions. These employees are called as Direct Writers. Consider the fact that a direct writer is not an agent for the insured and at the time of the claim direct writer will like to remain loyal to the insurance company not to the insured. This is where having a producer in the middle makes the things easier for the insured.
Property and Casualty agents
Generally in the health insurance segment producers/agents cannot bind coverage or commit policies, which means they just act as intermediary between career and insured. But Property and Casualty insurance producers are given more rights most often by Insurance careers and they can also bind insurance coverage. They can collect premiums, provide oral or written commitments and issue selected types of policies from their own office.
Brokers are also licensed by the insurance companies just like agents/producers but while agents represent the insurance company to the customer, brokers represent the customer to the insurance company. Brokers can generally work with multiple insurance companies, collect premiums, deliver policies but they cannot bind coverage.
A solicitor works under a producer (and mostly the solicitors are also licensed). Solicitor’s job is to solicit insurance (to try to sell insurance), help with the application process, collect premiums and deliver policies.
Insurance consultants also sell policies but they do not get commission from the insurance careers. They work for the benefit of insureds and charge a fee from insureds for their services.