Agency and Agent:

An Insurance Agency sometimes called an insurance agent – is an individual or company authorized by a carrier (insurance provider or insurance company) to sell the insurer’s products in exchange for compensation. Agents are regulated by the laws of the state in which they work.

Agents act as representatives of insurance companies and may be captive or independent. A captive agent represents a single insurer. An independent agent represents multiple insurers. For example, Pacific Life in California is an independent agent. Western-Southern Life and New York Life are examples of Captive insurance agents.

Insurance Producers

An insurance producer is a general term applied to anyone who deals with the sale of insurance products. Producers must be permitted/licensed by the state in which they wish to sell insurance.
An insurance producer is a licensed salesperson who works for an insurance agency. The main goal of the insurance producer is to bring in new customers and cross-sell new policies to existing customers of the agency.

Insurance producers may be agents or brokers, both of which usually consists of a different set of licensing requirements.

Agents and Brokers

Insurance agents represent insurance companies. By contrast, insurance brokers represent insurance buyers. In other words, agents look for clients who will buy insurance products, while brokers look for insurance products that will meet their clients’ needs. In addition, an insurance agent can bind a client to a policy whereas an insurance broker cannot. Once a product for a buyer has been found by a broker, a producer/agent must complete the transaction.

An insurance agent is an individual appointed to represent a specific insurance firm. An insurance agent may be a “captive,” meaning her company disallows her from representing other insurance carriers, or an independent agent who represents several companies, allowing greater flexibility to meet client needs. Some companies may allow their captive agents to contract with other insurance companies to sell non-competing lines of insurance that the company may not offer.

An insurance broker is a producer who operates very similarly to an independent agent. Instead of representing just one insurance company, brokers may represent several different companies, allowing them to buy around for the best rates and coverage for their clients. Many states may have quite different licensing requirements for brokers than agents and may require a higher level of insurance industry experience. A challenge of being a broker as opposed to an agent is that it can be difficult to keep up with the rules and policies of all the different companies they represent.