Insurance Broker vs Agent: What Is the Difference?
As more and more people opt to buy insurance, there is bound to be an increasing need for insurance salespersons. Even though buying insurance online is on the rise, many people still prefer the personal touch of an insurance agent or a broker.
These two roles in the insurance industry are often considered to be the same. However, there are differences between a broker and an agent. While both aim to sell insurance products to prospective policyholders, their roles differ in the parties they represent and the services they provide.
Let’s take a closer look at the differences that arise when you pit different aspects of an insurance broker vs an agent.
Who is an insurance agent?
An insurance agent is a representative of a company or various companies, licensed to sell their insurance plans to buyers. An insurance agent can sell insurance plans that cover health, travel, property, business, and other aspects.
There are primarily two types of insurance agents:
Captive insurance agent
A captive agent is affiliated with only a single insurance provider and has only their products in the line-up.
Independent insurance agent
An independent agent has plans from multiple insurers in their cache. They represent all the insurance providers whose products they sell.
Aside from these two, there are PoSP insurance agents as well. A PoSP insurance agent sells simple, pre-underwritten insurance products to customers.
Who is an insurance broker?
- An insurance broker offers professional services related to insurance. An insurance broker advises and showcases insurance products to customers based on their precise needs.
- The primary role of an insurance broker is to work closely with a customer and comprehend the kind of coverage they need.
- A broker is not affiliated with any insurance company.
- Brokers are usually approached by those who may have particular insurance needs. For example, a business organisation may avail of the services of a broker to understand the kind of coverage their factory equipment needs. Or the head of a large family may ask for brokerage services to equip their family with a health insurance policy.
Insurance broker vs Agent
| Aspects |
Insurance agent |
Broker |
| Finalising insurance sale |
An insurance agent is licensed to complete the sale and sell insurance policies directly. Once the customer has chosen a policy, they do not reach out to any other party to complete the sale. |
A broker has to connect with an insurance agent to finalise the sale they have made. |
| Earnings |
An insurance agent earns on the basis of commissions. In the case of full-time agents, a salary aspect may be present. |
Brokers earn primarily on the basis of commissions. |
| Representation |
A PoSP or an insurance agent represents the insurance company that they are working with. |
A broker represents the buyer. Their first duty is towards understanding the buyer’s needs and then providing the policy that meets those needs. |
| Qualification and licensing |
Before becoming an insurance agent and selling insurance, one must qualify for the IRDAI exam and undergo a 15-hour training process. Post this, one receives a license to become an insurance agent |
Brokers have to undergo relevant courses from private institutes. A license from IRDAI is required to function as an insurance broker. |
Also Read: Insurance PoSP vs Agent - What’s the difference?
As one can see, insurance agents, as well as brokers, play a pivotal role in the field of insurance. The services they provide cater to different types of customers and can enrich their insurance experience greatly.