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With the progress in the tech world, the sale of insurance has moved into the next level with the most number of people comparing and buying the insurance policies online. However the role of insurance agents and insurance brokers is still critical as people buying the insurance wants to ensure that they choose the best-suited insurance policy for them and their policies. The essential role of an insurance salesperson is to help the customers in buying the insurance that meets the customer’s requirement among a variety of offers.
As far as insurance sale is concerned there are two terms- Brokers and Agents that one may use interchangeably without really knowing that they may sound identical but both have differences with respect to their roles and objectives. In this article we shall identify what makes them differ with each other.
The insurance broker is an expert who specializes in insurance and risk management. They act on behalf of their customers and advise them on matters related to insurance policies.
An Insurance agent is a person who works for an insurance company and sells the insurance products of that company. He pledges his loyalty to sell the insurance products of a particular company and in return receives money for such work from that company.
The Insurance Agents and Brokers differ on the following aspects as specified below.
The insurance agents represent only one company and pledge their loyalty to that company by selling products in the company’s line up. Moreover they are involved in improving the brand image of the company for which they work.
Insurance Brokers unlike agents sell insurance products of multiple companies. They do not pledge allegiance to a specific company but sell insurance products based on the requirements of the public.
As stated above the insurance agents work for a particular company therefore they are provided training from that company before selling insurance products. Insurance brokers are not trained by a particular company as they deal with the products of various companies. However they may take any external course for training, if required.
As far as licensing is concerned both insurance and insurance brokers require licenses to operate in the market. In case of agents they must obtain a license under the regulations of IRDAI (Insurance Regulatory and Development Authority of India) after completing training. The insurance brokers also require licensing from the IRDAI and they need to fulfill certain eligibility before obtaining a license.
An insurance company is accountable for the actions of its insurance agents which means that the Insurance Regulatory and Development Authority of India has the authority to penalize the insurance company for the misconduct caused by its agent. Insurance brokers have slightly higher accountability because they are not backed by a particular company. They may also be penalized if they provide misleading information to the customers.
The commission offered to the insurance agents are generally higher than what insurance brokers receive. The agents earn a stable income as they work for a particular company and that company may pay extra commission depending on the work of the agent. In the case of Insurance brokers commissions are based upon the sale they make. Brokers assist the customers in finding the right policy and for that they charge money from the companies of whose policy they sell. Brokers may experience up and down in their income depending upon the type of policy and company.
Insurance agents could be able to provide personalized service to their customers as they have a very limited customer base for selling the products of the company. In addition to that an agent works for a company hence he represents the image of that company and acts accordingly to provide personalized service whereas the brokers provide their services to a wide customer base through the knowledge they possess. It may be noted that having a wide customer base may deter the brokers from providing a personalized service to their customers.
Insurance agents and insurance brokers differ in terms of the magnitude of businesses. Insurance agents have a limited magnitude of business as they deal with the products of one company. In contrary to it insurance brokers have a higher magnitude of business comparatively as they deal with more than one insurance product in the market.
Insurance agents might or might not possess the experience and expertise to assist you in finding the best policy whereas the brokers over a period of time develop experience in advising for the best policy out of many policies.
Recommendations regarding an insurance policy are biased towards the company for which an agent works whereas in case of insurance brokers recommendations may be in favor of the buyer.
Whenever you have difficulty in selecting the right insurance product you may take the assistance either of an Insurance agent or Insurance broker. Under the IRDAI regulations both Insurance agents and Insurance brokers have a moral responsibility to provide the customers with accurate information and not mislead them. In case of failure to fulfill their duties and responsibilities it may give rise to legal disputes. Therefore both must assist their customers in finding the best-suited insurance covers.
Also, Read: IRDAI Broker License.