insurance broker vs insurance agent

Insurance broker vs independent agent (insurance agent)

Making up your mind on who to purchase insurance from can be bewildering. Typically, you have three alternatives, namely, insurers whom you can purchase insurance directly from, insurance brokers that source coverage options for you from a range of different providers and insurance agents who sell insurance for a particular insurer on their behalf.  

In this article, we provide you with a detailed comparison and contrast between purchasing insurance directly from an insurer, buying insurance from an insurance agent and purchasing insurance from an insurance broker.   

Directly taking out insurance from an insurance provider (insurer) 

Upsides 

• Insurance plans that are directly from insurers might be cheaper than those from insurance agents and insurance brokers because insurers have no need to pay a commission to an insurance intermediary (agent or broker) in this case. 

Downsides 

• Although insurance plans from some insurers are really cheaper than those from others, an insurance provider is not going to let you know which of their rivals have similar plans at a lower premium. But insurance brokers will give you a comparison of different plans and offer you the better deal.  

What is the difference between insurance brokers and insurance agents? 

Features of Insurance Brokers: 

• They are independent of any insurer or agent, and will have a broader variety of companies (insurers) with which they can source policies from 

• They are unable to sell insurance plans directly themselves, nor can they bind coverage without going to the insurer first 

• They provide clients with extensive application, claims, renewal, and administrative support  

• They specialize in a wider range of plans and whole-of-market offerings because of their independent nature 

• While insurance agents serve as extensions of the insurers themselves, brokers act as your representative in the insurance sales relationship. Since they are independent nature, insurance brokers are not beholden to anyone but the client they are aiming to match with an insurance policy. This means your satisfaction (clients’ satisfaction level) is the most important thing to them. They will do everything which is reflected on their after-sales support to make sure you are really happy with your insurance policy and everything in between and also their service quality surpasses that of other insurance agents or even insurers themselves. 

Features of Insurance Agents: 

• Insurers appoint insurance agents to sell products on their behalf. 

• There are two key types of agents, namely, captive agents who are appointed to sell on behalf of only one single insurer and independent agents who can present any insurance plans from any number of insurers they are contracted to. 

• They are specialists only in the policy details of the insurance plans they offer. 

• Their priority is to maximize sales and profit of a particular insurer rather than pitching to you as a client all the different coverage options available in the insurance market. 

Here is a side-by-side comparison of advantages and disadvantages between the three types of insurance parties (insurance brokers, insurance agents and insurers)  

Insurance broker benefits Insurance agent benefits 
• Prioritizes client needs  
• Expertise in insurer policies and wider market solutions  
• Competitive pricing from sourcing products from a wider range of insurers 
 
• Often better client support  • Premium discounts 
• Ability to bind coverage on insurers behalf  
• Direct relationship with insurers  
• Ability to sell you an insurance plan directly 

On the whole, you should weigh these factors alongside your own budget, health requirements, and comfort in dealing with third parties to ensure that the insurance solution you purchase in the country you live in or overseas will meet your expectations. 

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