Agents and brokers both act as intermediaries between insurance companies and insureds. They both help consumers find coverage. So we are left wondering “whats the difference between agents and brokers?” Let’s show you what we’ve found!
If you’re new to the insurance industry or hoping to brush up your knowledge, we’re here to help. Let’s start by defining what each of these terms means.
Agent
An insurance agent represents one or more insurance companies and sells their policies. They solicit, negotiate, or instigate insurance contracts on behalf of an insurer. An agent can be independent or an employee of the insurer. Insurance agents are the legal representatives of insurers, rather than policyholders. They have the right to perform certain acts on behalf of the insurers they represent, such as to bind coverage.
Broker
A broker is an insurance intermediary who represents the insured rather than the insurer. They assist consumers who are seeking coverage. Unlike independent agents, brokers are not the legal representatives of insurers. This means they often do not have the right to act on behalf of insurers, such as to bind coverage. To bind coverage, the broker must hand off the account to an agent or insurer for the transaction to be completed.
How are Agents and Brokers different?
Agents represent insurance companies. Brokers represent consumers. Agents sell policies from insurance companies they represent. Brokers search for policies from different insurance companies. Agents can bind coverage. Brokers cannot bind coverage.
Related Terms
Carrier Insureds Managing General Agents (MGA)
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Understanding the difference between insurance agents and brokers is key, and this article does a great job breaking it down! It's helpful to know that agents represent insurance companies, while brokers represent consumers. Plus, the related articles provide even more insight into the insurance industry.
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