Agents like to say that "a broker will make you broker and an agent is your friend."
The primary difference between an insurance broker and an insurance agent is who they represent. Initially it might appear that both represent the insurance buyer. Some might say that the term “Insurance Broker” sounds complicated and “Insurance Agent” sounds friendly. It is true that both act as intermediaries between insurance buyers and insurers. In full exposure, the broker represents the insurance buyer, an agent represents the insurance company.
How can this be? Why is there a difference and how does the difference affect me as an insurance client?
The agent is a captive employee insurance of the company. In the insurance industry they are known as captive agents because a captive agent only has one line of products to offer. They are also captive in that they can only market and sell their brand of insurance company products. You can identify a captive agent by the logo on the product and on their business sign.
An insurance broker truly works for the benefit of the insurance buyer. They offer many different insurance products from many insurance companies. Insurance is typically not a one product, one solution, one price commodity. Everyone and every business buying insurance coverage is slightly unique. This uniqueness creates opportunity to shop for the right insurance product. That is what an insurance broker does on behalf of the insurance customer.
A captive agent knows all about their products. An Insurance broker understands many insurance companies products. It is in the small details that the insurance broker can find the best value for their client. If price is the only option and proper coverage does not matter, or if coverage is the only option and price doesn’t matter, or a third option, the right coverage and the best value is important for their client, the insurance broker is uniquely able to find the best solution.
Why are there agents and brokers? That is a good question and suffice it to say, the insurance market has room for both and I will save the answer for another time. It is complicated. Today, if you are looking for value, coverage and price, or if you comparison shop, I recommend that you seek an insurance broker. And as always, you should compare policies for those elements important to you; policy terms, coverage and pricing.
And here is where, a captive agent can’t help you. They have one product, one solution. Therefore they have a limited knowledge of what other insurance products are available for your best value comparison.
We are not against captive agencies. They offer our clients many reasons to come see us. A recent typical example: A referral client came to us having heard about Pacific Reliance Insurance from trusted friends. We had saved them enormous amounts of money and found better coverage as well. This new client was being charged a far too high price for her condominium insurance. We were quickly able to assess which carriers would be a better match for her situation and immediately began researching these options to find the best coverage and value for her. We earned her business and saved her an excess of eight thousand dollars per year, with slightly better coverage.