Agent vs. Broker vs. General Agency at a Glance
For many consumers – and a few insurance professionals – there’s some confusion about the roles of agents, brokers, and general agencies (GAs) in the insurance industry.
What Is an Insurance Agent?
Let’s look first at “agent vs. broker.” Insurance sales professionals can choose to align themselves with an existing insurance agency. Or they can start their own agency. Or work as a captive agent for an insurance company or financial institution. Typically, an agent sells products from a single company – like State Farm, American Family, or Allstate. Agents who work for these organizations are, generally, not permitted to sell products or services from other insurers.
Occasionally, an agent may represent multiple companies if their primary carrier does not offer a full line of coverage. For example, if you’re affiliated with a company that writes mostly Medical, you may need a secondary carrier for other coverage. That can include Life, Disability, Voluntary Benefits, and Property & Casualty (P+C), among others
What Is an Insurance Broker?
In contrast, a broker typically works independently. He or she may be appointed to sell products from a diverse range of insurance companies. For example, a broker may have a preferred Medical carrier but also sell ancillary or supplement products from others. Maybe Delta Dental, VSP, Humana and Colonial (for Disability), and Landmark Healthplan (for Chiropractic and Acupuncture).
In a broker role, you most likely will earn a commission on each sale. You may also be eligible for a bonus based on sales during a specific time period or your cumulative sales throughout the year.
Who Do Agents and Brokers Represent?
Because an agent can bind an insurance contract with a company on behalf of a client, it’s often suggested agents typically represent insurer interests. That compares to brokers who represent the interests of their customers. While this may be true in some situations, ethical insurance sales professionals need to be guided by state rules. The interests of clients always guide the most ethical professionals.
Benefits of Being an Independent Insurance Broker
As an independent broker, you’re able to be your own boss. You can work from your home or office (or virtually anywhere). And you can offer products and services from a variety of insurance companies. That enables you to work with and get to know your clients. Then you can find the solution that is the best match for their needs and budget.
Working as an independent broker, you may be able to make your own hours and market yourself (and your business) in the way you want. You can sell as many – or as few – products as you choose. You may want to specialize in a certain market niche (for example, employee benefits for businesses with five to 20 employees). In this role, you’ll be working to find the best insurance solution to address the employer’s budget and their employees’ varied needs. That may include a multi-carrier exchange, an alternative funding plan, or other choices.
In contrast, working as a captive agent representing a single insurance company, you may not always have a broad product portfolio or the most competitively priced solution.
Genesis, an employee benefits consulting firm, has published its own article comparing the agent and broker roles. You can read it on their blog.
Insurance License Types in California and Nevada
In California, the Department of Insurance offers more than 30 license types. Among the most popular licenses are the following:
- Life Agent (Life-Only Agent, Accident and Health or Sickness Agent)
- Life-Only Agent
- Personal Lines Broker-Agent
- Property and Casualty Broker-Agent
- Property Broker-Agent
You can be licensed individually or as business entity – either as a resident or non-resident.
In Nevada, more than 15 license types are available through the Nevada Division of Insurance. However, a “Producer” license is the choice for most insurance sales professionals. Both Individual and Business Entity licenses are offered.
What Is a General Agency (GA) and How Does It Help Brokers?
Many independent brokers work through a general agency (sometimes also called a general agent or GA). A GA doesn’t compete with you, but it will help you do your job better. The Word & Brown General Agency and others like us represent many different insurers, products, and services. If you want to sell products from a specific carrier, you will want to ask if your GA represents that company. A GA can often help you get appointed with the companies you want to represent. Then you’re able to offer a broader range of products and services to fulfill clients’ various insurance needs.
How Word & Brown Supports Independent Brokers
- Quote on your own using our industry-leading platform, WBQuote, or we’ll run your quotes for you
- Provide side-by-side plan comparisons to make the final plan selection easier for everyone
- Market analysis, benchmarking support, and positioning strategies
- Presentation support in person, by phone, and online – alongside you or in your place
- Pre-carrier review to ensure smoother submissions + cleaner, more complete cases
- Help facilitating faster turnaround times with carriers and administrators
- Simplifying the RFP process for larger groups + assisting with carrier negotiations
- Providing bilingual open enrollment meeting support (in-person or virtually)
- Ensuring accurate entry into your preferred enrollment platform
- Issue escalation when needed to keep clients happy and coming back year after year
Reach out to your W&B rep today to learn more about all of the advantages of partnering with us to help ensure your future success. We offer support from start to finish – and we do it without reducing your commission.
If you’re not working with us yet, we will make it easy to get started. Register online today or reach out to Jim Pippins, W&B’s Senior Director of Broker Success.
