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Like the most general public, we purchase our insurance policies either through an Insurance Broker or Agent. The functions performed by Insurance Agent are similar, but not the same, to those performed by Brokers.
Knowing the difference between the Insurance Broker or Insurance Agents would enable you to make the best use of their services for your insurance and financial requirements.
In this article, we will understand how they differ. We will also know how Agents and Brokers make money from the premiums we pay to our insurers.
Who is an Insurance Broker
Who is Broker: WealthBucket
An Insurance Broker sells, negotiates and solicits Insurance Policies for compensation.
Insurance Brokers represent the customer. That is they represent and work on your behalf. This is the key point of differentiation.
They are licensed to work independently. Therefore, they are not obliged to sell you policies from a particular insurance company, only. Which means, they can be a financial advisor and offer you a host of products and services. They provide you their expert advice and opinion on the insurance policies that fit your needs. They may be online or offline. Generally, the remuneration they receive is in the form of a brokerage by the company whose policy you finally choose.
Brokers can be sued if they promise more than what is delivered. The IRDAI can cancel the Broker’s License if he/she is found guilty.
Who is an Insurance Agent
Who is Agent: WealthBucket
An Insurance Agent is usually a Captive Agent. They represent a single insurer. That is, he can sell Insurance Plans of that Insurance Company only, for which he is working.
At the time of becoming an Insurance Agent, he or the entity gets into an agreement with the Insurer. To sell insurance products on behalf of it. This agreement usually describes the authority provided to the Agency to initiate a policy on the insurer’s behalf. The Insurance Agent may have permission to bind some types of coverage but not others.
Points of Difference in Insurance Broker or Agent
Generall, when we are buying Insurance, the terms “Agents” and “Brokers” are often used interchangeably. But actually, both these terms have a different specific meaning. That explains the different roles played by Insurance Broker or Agent. That they both sell insurance policies to customers and earn Insurance Commissions based on their overall sale, maybe their only similarity.
Learn about Tax Return For Insurance Agent
| Particulars | Insurance Brokers | Insurance Agents |
|---|---|---|
| Training | Because the Brokers are licensed to sell a wide range of products, that are on offer by various Insurers. Therefore they don’t get any training from any specific companies. They may take some external courses to learn and improve their sales tactics and pitch etc. before they start selling insurance products. | Insurance Agents represent one particular Insurer. Hence, they are given in-house training on various products offered. And they need to attend various training sessions throughout their careers. There they get updates about newly introduced products, closing down of any, changes in strategies, updates on the old ones, etc. |
| Licensing | A license by the IRDAI is compulsory for the Brokers to operate in the market. Before receiving this license, they need to show that they have achieved a certain level of business, as per the regulations. | Insurance Agents who have received in-house training must obtain a license as per the regulations put forth by the IRDAI. |
| Representation | Brokers, normally, sell insurance products belonging to different companies in the sector. They do not have any allegiance to one specific company. They are to sell products based on the requirements of customers. | Agents represent only one company. Therefore they sell only those products which are available in the company’s lineup. In addition to selling policy plans, agents also help in improving the brand image of the company they represent. |
| Responsibility | The responsibility of Insurance Brokers is much vast. They need to be in the know. They need to study and understand the many products are available in the sector. Out of which, they are bound to explain everything to their clients. They are not backed by any specific company. Brokers must disclose the terms, conditions, pros & cons and prices of these products. They can get sued for any misleading information they provide to their clients. | An insurance company is accountable for the actions of all its agents. IRDAI has the right to penalize the company for any wrongdoings of its insurance agents. |
| Commission | Brokers sell a variety of products. Their commissions are based on the sale they make. They must advise their clients about the products they sell and charge a fee from the companies. Based on the type of policy plans sold, brokers could experience variations in their income. | The commissions offered to agents are higher than those of brokers. The income earned by agents is relatively stable as they provide service of only one company. Companies may pay extra compensation or other incentives, based on the performance of agents. |
| Service | Brokers offer good service to their clients because they have professional knowledge. But due to the need to have a wider customer base, they may not be able to offer personalized service to their customers. | Agents may provide personalized service to their customers due to their limited customer base. Additionally, they may offer products catering to different needs. They may offer Deposits, Mutual Fund investments, etc. Of course, all these products and services must belong to the same insurance company they are representing. |
| Business | Insurance Brokers have access to multiple insurance products in the market. Therefore their volume of business is often much higher. | For insurance agents, on the other hand, the volume of business is limited since they deal with the products of only one company. |
Final Notes
In case you are having trouble selecting the insurance product appropriate for your needs, you can seek the help of an agent or a broker to guide you. As per the regulations set by the IRDAI, Insurance Agents and Brokers have a moral responsibility to not misrepresent anything to the end customers. When agents and brokers fail to adhere to their duties, it results in legal disputes with customers. Of course, it is true that agents and brokers have their own agenda. They have deadlines to meet. And targets to achieve. Still, their primary focus must be on helping customers choose the right insurance products.
For all your insurance and investment-related requirements, simply get registered with WealthBucket. And rest easy. Let us take the stress off your mind.
We offer a vast variety of financial products. Get associated with us and have access to all of them. We offer equity funds, small-cap funds or multi-cap funds, Short Term Mutual Funds, etc. Just to name a few.
Call now at +91 9999379929 and get started.
You can also mail at contact@wealthbucket.in.
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