Both licenced professionals who help small businesses obtain insurance are insurance brokers and agents. A broker, on the other hand, works with a wide range of carriers, whereas an agent just represents a few insurance companies. Finding the proper partner for your company might be aided by understanding the differences.
What do insurance brokers and agents do?
Agents and brokers that sell insurance are licenced individuals. They could decide to focus on a particular field, such property and casualty insurance (P&C), which defends companies from claims and property damage.
Both agents and brokers are required to hold a licence in the state in which they conduct business and to abide by all applicable laws and rules. Insurance brokers and agents, like any small business, require their own business insurance in order to function across many different locations.
Whichever option you select, agents and brokers are required to help you find the best policy for your needs in a good faith manner. Let’s examine the similarities and differences between the two and how each can aid in your search for the best small business insurance coverage.
An insurance agent is what?
An insurance agent promotes one or more insurance providers and earns commissions by selling their products. They can either operate as independent contractors or full-time insurance sales representatives for an agency.
They have to help customers discover the correct coverage while simultaneously acting as a representative of the insurance business in the transaction. The many types of insurance the agent is permitted to sell and the commission rates for each policy are specified in the agency agreement, or contract, the agent has with the insurer.
Insurance agents come in two varieties:
- Captive agents often exclusively work for one particular insurance provider.
- Independent insurance brokers frequently represent several insurers.
Both captive and independent agents can complete an insurance transaction from beginning to end on a variety of insurance policies. They both work on commission.
An insurance broker is what?
An insurance broker helps consumers in their search for coverage and can, in exchange for a commission, offer products from a variety of insurance providers. A broker’s main responsibility is to the client, as opposed to captive and independent agents who represent one or more insurance firms.
A retail broker looks at a client’s demands and compares policies from several companies to obtain the best deal for that client. Broker fees, which are a percentage commission on the sold insurance policies, are how they are paid.
Brokers cannot bind coverage while buying insurance on behalf of an insurer because they do not represent insurance firms. To complete the process, they must turn over the account to an insurer or an insurance agent.
What distinguishes an insurance agent from a broker in particular?
While both agents and brokers can provide insurance quotes on various policies and act as middlemen between insurance buyers and the insurance market, there are two significant differences between the two:
- Brokers represent the client, whereas agents represent the insurers.
- Brokers are unable to complete insurance sales (bind coverage), only agents can.
An agent must sell policies from one or more of the insurance companies they represent, whereas brokers look for coverage from several different carriers. In order to help expedite a successful transaction and bind coverage to the client, agents first describe the various insurance options and leave the decision-making to the client.
Since brokers have a duty to represent the client’s best interests, they typically act as advisors rather than agents when determining coverage. Brokers review several policies and advise clients to purchase specific coverages from various firms, but they must then contact an agent or an insurance provider to have the chosen policy assigned to the client.
Businesses that are well aware of their insurance requirements may discover that an agent can best meet their requirements. A firm may benefit more from using an insurance broker if it faces certain risks and difficulties obtaining coverage.
What to look for in a broker or agent for insurance
Many people begin their search for small business insurance by asking their friends and professional contacts for recommendations and referrals. Additionally, they might look online for options and ask for advice from any trade or professional organisations they belong to.
It’s critical to engage with an agent or broker who is qualified to offer insurance plans from trustworthy companies and who is licenced, experienced, and familiar with the sorts of insurance that your company need.
Many different kinds of small business insurance coverage are available from insurance agents and brokers, including:
- General liability protection
- Errors and omissions insurance, or E&O, is another name for professional liability insurance.
- Insurance for workers’ compensation
- Cyber liability protection
- Business auto insurance
- Insurance for commercial property
- BOP, or business owner’s policy
Is Insureon a broker or an agent?
With licenced insurance agents in every state, Insureon is both a business insurance agency and a brokerage. To locate the best plans for their needs, our advisors provide small business owners with coverage options from leading insurance carriers.
Our insurance brokers assist clients in locating coverage from various insurance underwriters that is not included in typical insurance packages, such as excess and surplus lines. After assisting you in finding coverage, we can help you set up an insurance programme that satisfies your company’s risk management requirements. We are also available for enquiries.