In a nutshell, the main difference between an insurance agent and a broker is that an agent represents the insurance company, while the broker represents the insurance buyer; an individual or business.
So what’s the deal with Insurance Brokers?
Brokers don’t carry contractual obligations with any one provider and so they can reach out to any number of insuring companies in order to find the best fit and cheapest policy for their client’s unique situations.
Most brokers are able to complete your insurance policy and provide you with the insurance documentation in less than 24 hours. This can vary based on the insurance company and the type of insurance you are buying, in some cases you can receive the official documents immediately, whereas in other you may receive a ‘Binder of Insurance’ which is an interim document guaranteeing coverage.
Advantages of dealing with an Insurance Broker can include: a third party to contact in the event of a claim, a larger pool to remarket with if your insurance needs change, and the guarantee that you will always get the best price and coverage available to that broker, even if it means switching insurers.
Brokers also have to maintain full licences in their respective provinces, which means that they are required to complete yearly training hours. This means that your broker will have the most up to date knowledge in the insurance marketplace. As they also deal with a variety of markets, their insurance knowledge base tends to be diverse.
And what about Insurance Agencies?
As we mentioned, an insurance agent has a contractual obligation to a specific insurance company. Their loyalties lie with the insuring company first and with the insurance buyer (you), second. Agents are generally aligned with a single company and have extremely good product knowledge on the policy they sell based on their close ties and policy focus.
Captive agents have the luxury of a great deal of support from the parent company. Frequently this comes in the form of financial assistance for office space, overhead expenses, employee benefits, etc. The product training is extensive including marketing materials, promos, campaign assistance and detailed seminars. However, they are still bound to a single group of policies that might not be the best fit for your unique situation. Sometimes a parent company may discontinue certain policies or raise rates. Without comparable companies to move laterally to, you may need to look elsewhere.