Who is an Insurance Broker?

An Insurance broker is a person who simultaneously deals with several insurance companies on behalf of his/ her clients. There main difference between an insurance broker and an insurance agent is that insurance broker does not work for insurance companies while the insurance agent works for insurance companies. The similarities are that both work for commission, prepare and negotiate insurance policies and settle the claims.

Every businessman is well aware of importance of insurance to mitigate various business risks. A variety of insurance contracts with slight variations in their coverage and premiums are available in market. So it is not an easy job to select the right policy with right premium and sometimes on right time. To ease the process of selecting an insurance policy with right premium from right insurance company, the concept of an insurance broker emerged.

Insurance Broker

An insurance broker is an insurance consultant who at a time deals with various insurance companies and finds best insurance solutions for his/her client according to or near to his tailor made requirements. Normally he possesses the market knowledge of the existing policies the different insurance companies are currently offering. He/she maintains very close relationships with different insurance companies. Matches the requirements of his/her clients with the insurance policies and strikes the deal. The insurance broker off course, perform all these functions for brokerage or commission.

Insurance Brokers and Insurance Agents Compared

The fundamental difference between the both, the insurance broker and the insurance agent is that the former is not associated with a specific insurance company, while the later is closely related and some times employed with the insurance company. The functions of both resemble in the sense that both tailor insurance policies, normally work on a commission and settle the claims.

Insurance Industry in United States

Insurance brokerage industry is properly regulated in the United States. All the insurance agents are required to get licenses in almost all the states of United States. Majority of the states have bilateral agreements with each other under which the brokers registered with one state can be easily licensed with another state. There is an exception to this, the state of Hawaii. The registration of insurance broker laws in this state, require that all the licensed brokers must be resident to the state of Hawaii.

To become a licensed insurance broker one has to pass an insurance exam. Although it is not mandatory for an insurance agent or an insurance broker to enroll for classes but it could be more beneficial. For professional grooming it is not mandatory for further improvement in qualification, however, managerial experience and additional educational carrier improves the carrier.

As the industry is closely regulated, there could be tough competition amongst the small brokerage firms and the larger firms. This is because of restriction of any rebate or any sort of discounts on the policy prices of insurance companies.

The regularization of the industry invites specialization like auto, health, home, life and other types of insurance. For dealing in insurance of investment, special licenses are required by SEC (Securities and Exchange Commission).

Research study shows brokers play important role in to help small businesses to find competitive health insurance. Brokers not only assist in insurance sales, but also they assist in employee enrollment and resolve benefit issues.