What is the Difference Between an Agent and a Broker?

independent insurance agent

An oft-asked question. Let’s break it down and then consider its significance.

Technically, an agent is someone who represents an insurance company. A broker is someone who represents the client.

I am an insurance broker, so as much as I’d like to tout the differences and huge benefit of going with a broker, I think in actuality the distinction between broker and agent isn’t all that large.

Most times, the words are used interchangeably. Most insurance brokers also refer to themselves as agents. When you get your insurance license, it is typically called an “agent” license. You don’t apply for a “broker’s” license.

And although an agent will often have the interests of the insurance company forefront in mind, and a broker supposedly has the interests of the client forefront in mind, the fact is: we are all human. There is good and bad in everyone. Some people are more bad than good; and some are more good than bad.

A powerful force among our species is self interest. Most agents or brokers mostly have themselves in mind. Both are looking to make a living. Sure, 50% of insurance professionals may try to always do what’s best for the client. But the one distinction that may make a difference here is: a broker will have more tools in his/her arsenal to serve the client. That leads to an increased likelihood that they broker just may have access to the product that is the best fit for the client’s needs.

An agent may represent one company, eg. New York Life, or Humana.

They are looking to fit the client into a product that happens to be in their portfolio. After all, they can do nothing else. They aren’t contracted with or allowed to sell other companies’ products. There might be a better fit or a lower price available elsewhere, and the agent cannot get it for the client. In all fairness, it may just as well be the what the agent has in their portfolio is indeed a terrific fit for the client.

Be careful not to judge who might best be able to help you based on a title. You are sometimes better off going with a great agent, who is a great person, who will understand you and your needs and serve you year after year than you will be going with a broker who is simply trying to sell you something and move on.

And I say that as a broker, so….

You are best off trusting your gut instinct. You are the one who will always have your best interest in mind. Chose the individual you work with carefully based on your interaction and relationship. You can often tell when someone is trying to “sell” you something, whether they’re an agent or a broker.