The difference between an Insurance Broker and an Insurance Agent

10.11.2021
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Explanation:

Agent: An insurance agent sells or promotes insurance products on behalf of their organization. It is a person who represents an organisation and sells its product. An insurance agent is responsible for filling the forms and processing them correctly and they ensure that premiums are timely paid. In addition to this, agents also focus on improving the image of the company.
An Insurance Broker: An insurance broker sells, buys, or negotiates various financial products best suited to their individual client needs. Brokers are finding out what’s best for their clients from several companies and organizations, as per client requirements.

Product knowledge:

Insurance Agent: Insurance agents have detailed knowledge of the products offered by their own organization or company. Although they are not required to know about all products in the market, they need some knowledge about their competitor’s product.
Insurance Brokers: Insurance brokers are required to know about multiple products in the market. They need to explain various products that are the best fit for the requirements of their clients. As a result, brokers must be well-versed in a variety of products.

What they offer/Volume of business:

Insurance Agent: Insurance agents are responsible for offering products and services available through their employer’s company and also for accurate processing of documents, including paperwork, forms, premium payments, etc. Insurance agents have a limited number of policies and products to offer.
Brokers: On the other hand, brokers are responsible for providing you with information on various suitable options as per your needs. Insurance brokers have several financial products and can help you choose the best one that suits your requirements.

Assigned to:

Agent: An agent is appointed by the insurance company to sell its products in the market and also increase the brand value of the company.
Broker: Brokers can be selected by buyers after careful and informed scrutiny from the pool of brokers.

Characteristics:

Agent: There are two types of agents:
An Independent Agent is an agent that sells products or policies provided by several insurance carriers.
A Captive Agent is an agent who only works for one insurance company.
Broker: There are three types of insurance brokers:
Direct Broker: Provides advisory services concerning the most appropriate policy and its related terms and conditions, licenced by the Insurance Regulatory and Development Authority (IRDAI).
Reinsurance Broker: A broker works on behalf of direct insurers and reinsurers. They arrange reinsurance contact between both parties.
Composite Broker: The Composite Broker has a double role. They are a combination of both direct and reinsurance brokers.

Licenses:

Agent: An agent who has received training must obtain a licence as per the regulations put in place by the government.
Broker: Brokers must be licenced by the government to operate in the market. They are expected to meet a certain level of business regulations before they get the license.

In conclusion:

When you have any problems selecting the best insurance product, you have the option of a broker or agent who can guide you. Trust and reliability should be the two main factors in deciding which product is best suited for your requirements. As per government regulations, brokers and agents have a moral responsibility to not misrepresent anything to their clients. However, there are more important things to bear in mind while selecting an insurance plan – cost, speed, ease, security of your data, and the satisfaction or peace of mind, which comes from the depth of knowledge. So brokers and agents assist you by providing a product that best suits your needs.

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