An insurance agency is a firm authorized to sell insurance products to the insured in exchange for compensation (commission) from a carrier. Insurance firm agents always work under the guidance of the state in which they work. Most insurance agencies are independent and sell products from different carriers, but there are some agencies that only sell the products of one insurer, so they are not able to compare prices and features of other products on the market. An insurance agent is paid a salary by the insurance business, as well as a commission or bonus based on sales.
Insurance brokerage firm
An insurance brokerage firm or insurance broker represents consumers in their search for the best policy as per their requirements. Insurance brokerage firms work closely with their customers and study the policies. The broker investigates the terms and circumstances of numerous plans before recommending an insurance policy that best meets the customer’s needs at the lowest possible cost. Since brokers don’t represent any insurance companies, they can’t bind coverage on behalf of an insurer, so they have to hand over the account to an insurer or insurance agency to complete the transaction.
Agents always represent insurers. On the other hand, brokers represent consumers.
While agents focus on selling insurance policies, brokers focus on finding policies that meet customers’ needs and requirements.