What is an Insurance Broker: A Guide to Understand the Differences Between an Agent and a Broker

“What is a licensed insurance broker” and “aren’t agents and brokers the same thing” are the two big questions that are generally misunderstood by the public. Although the two terms are used interchangeably and operate on common grounds. They have some distinctive differences between them that set them worlds apart. They key difference between them is who they represent. Such critical differences make it important for an individual to understand them before selecting a career to pursue.

What is an insurance broker?

An insurance broker is a licensed professional that serves their clients best interest. An insurance brokers duty is to research coverages, terms, conditions and also prices from multiple carriers that best fits their client’s financial needs. An insurance broker is also legally bound to recommend the best coverages that best fits their client’s financial interests.

When it comes to what is an insurance broker, your first and foremost duty is to look after your clients. An insurance broker must be able to facilitate insurance related solutions to any problems their clients face. It is not easy being an insurance broker as it requires one to be well versed with everything the carriers offer.

Aren’t insurance agents and brokers the same thing?

Although we answered the question what is a licensed insurance broker, it still does not clearly answer how they are different from insurance agents. Although they operate on common grounds, there are a few distinctive differences between them.

  1. An insurance agent’s primary duty is towards their carriers, whereas an insurance broker works for the best interest of their clients.
  2. According to Investopedia, an insurance agent earns based on either salary or commissions. However, an insurance brokers earnings are based on direct payments by the clients.
  3. Unlike insurance agents who earn based on commissions, an insurance broker is legally required to reveal the exact amount they have been charging their clients.
  4. According to Small Business, an insurance broker unlike an insurance agent, cannot bind coverages or complete insurance sales on behalf of their clients.
  5. Unlike insurance brokers, who represent their clients, an insurance agent must contribute to enhance the brand image of their carriers.

Nevertheless, an insurance agent and an insurance broker are the bridge of communication between the insurance buyers and the insurance providers. Before selecting a career to pursue, anyone interested to work in the insurance field must know how to get an insurance license. This applies for both agents and brokers, as they both operate according to laws enforced by the insurance industry in their respective states.




Agency Height is an insurance blog that offers insurance agents content about the insights and queries of the industry to make their work more efficient.

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Agency Height

Agency Height

Agency Height is an insurance blog that offers insurance agents content about the insights and queries of the industry to make their work more efficient.

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