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Insurance Agents - Insurance agents are insurance professionals that serve as an intermediary between the insurance company and the insured. As a broad statement of law, an insurance agent’s liability to their customers is purely administrative in nature. That is, agents are only responsible for the timely and accurate processing of forms, premiums and paperwork. Agents have no duty to conduct a thorough examination of an individual’s business or to make sure that appropriate health insurance coverage has been provided to the concerned individual. Rather, it is the customer’s obligation to make sure that he/she has purchased the required/desired insurance coverage. Insurance Brokers - Insurance brokers can be best described as a kind of super-independent agent. Brokers can offer a whole host of insurance products and services for an individual or a prospective policyholder to consider. Brokers are required to have a broker’s license issued by IRDA (Insurance Regulatory and Development Authority) which typically means that the broker will have additional technical and professional expertise as compared to an insurance agent.Insurance Collectors - Insurance collectors act as an intermediary between the Insurer and the insurance company. Insurance collector files claims and makes sure insurance companies pay what they owe. During training an Insurance collector learns the laws that govern debt collecting, negotiation skills and protocols and procedures for organization.
An insurance broker (also insurance agent) sells, solicits, or negotiates insurance for compensation. The largest insurance brokers in the world, by revenue, areMarsh & McLennan, Aon Corporation, and Arthur J. Gallagher & Co[1] and Willis Group.
Though not an absolute separation; an insurance agent is an insurance company's representative by way of agent-principal legal custom. The agent's primary alliance is with the insurance carrier, not the insurance buyer. In contrast, an insurance broker represents the insured, generally has no contractual agreements with insurance carriers, and relies on common or direct methods of perfecting business transactions with insurance carriers. This can have a significant beneficial impact on insurance negotiations obtained through a broker (vs. those obtained from an agent).
Any person acting as an insurance agent or broker must be licensed to do so by the state or jurisdiction that the person is operating in. Whereas states previously would issue separate licenses for agents and brokers, most states now issue a single producer license regardless if the person is acting on behalf of the insured or insurer. The term insurance producers is used to reference both insurance agents and brokers.
An agent is a person who represents a principal, who can be another person or a company, and act in the principal's behalf. An insurance agent represents the insurance company and an insurance broker represents the insurance applicant—both must be licensed by the state in which they conduct business.
The main duty of agents and brokers is to sell insurance. They also explain the benefits of insurance, and give their insured information as to what is covered and what isn't. They may also provide service after a loss, informing the insured what steps need to be taken to have the claim paid.
The insurance company is responsible for the acts of its agents, and it can be assumed by the insurance applicant that any information or payment of money to the agent will be received by the insurance company—not necessarily so for the broker, because the broker represents the insurance client, not the company
Insurance AgentsInsurance agents represent 1 or more companies, and so they are restricted to selling policies to particular people and for particular risks that the companies are willing to cover. If an insurance applicant has a particular need, a broker would probably be more appropriate.
Since insurance agents represent the company, anything communicated or given to the agent is legally considered to have been given to the company. If the agent fails to relay material information or the premium to the company, the company cannot later deny payment of a claim because of the failure of the agent to do his duty.
General agents, common in property insurance, have the authority to bind the insurance company, and, thus, can issue a policy immediately as a binder. A binder is evidence of insurance until the policy is actually issued.
Soliciting agents (aka special agents), common in life insurance, solicit business for the insurance company, but do not have the legal authority to bind the company to a contract; the insurance company must approve of the application before the insurance becomes effective.
Insurance BrokersInsurance brokers represent the applicant, and help the applicant to find the right insurance company at the best price. Businesses use brokers because they often have special insurance requirements, such as employee benefits. A broker can help them develop an insurance plan and write the policy, then find an insurance company willing to take the risk. Because brokers work in the field every day, they are familiar with many insurance companies, and what kind of risks they are willing to insure. Thus, the broker can match the applicant to the insurer—field underwriting.
Brokers are also needed to provide a market for surplus lines. Surplus lines are any type of insurance that is not offered by any insurer that is licensed to do business within the state, and the business must be placed with a nonadmitted insurer, which is an insurer that is not licensed for that state. This need arises because there is a need for some types of insurance or for a certain amount of coverage that is not provided by any insurance company licensed to do business in the state. When coverage is not available by insurers licensed in that particular state, state law allows the placement of that business with a nonadmitted insurer, through the services provided by a surplus lines broker, who is a broker licensed to place business with nonadmitted insurers.
The relationship among the broker, the insured and the insurer is different from the relationship among an agent, the insured, and the insurer. Because the broker represents the applicant and not the insurance company, what is communicated or given to the broker is not considered relayed to the insurance company by law, so it is important to deal with a reputable broker. If the insurance applicant conveys material information to a broker, but the broker does not communicate it to the insurance company, the company may, later, deny the payment of a claim because of the concealment of the material information.
In some court cases, however, it has been held that the broker is, in fact, an agent of the company because of the relationship that actually existed between the broker and the company, where the broker served as intermediary between the insured and the insurer in all of their dealings. Because many people don't understand the distinction between brokers and agents, and rely on the broker as being the actual representative of the company, some states have passed laws stipulating that insurance brokers are legal agents of the insurance companies, so that consumers can be assured that anything relayed to the broker will have been deemed relayed to the insurance company.
One of the disadvantages of dealing with a broker is that the broker cannot bind the insurance company; thus, the insurance applicant must wait for approval from the insurance company before the insurance is in force. To overcome this limitation, many brokers also are agents of some of the insurance companies.
Insurance agents, Brokers and Insurance collectors are insurance professionals who are intermediaries between insurance companies and customers.
Below mentioned details differentiate them based on the job description
1. In the case of insurance agents, they only serve as a link between the customers and the insurance companies. Their function is more on an administrative level.
2. Insurance brokers are more professional than the insurance agents. They may help a customer to make an informed decision on the policies. They offer a host of insurance policies for a customer to consider.
3. Unlike the insurance agents, the insurance broker is independent.
4. In the case of insurance, the insurance brokers have more knowledge than the insurance agents.
5. Insurance collectors act as an intermediary between the Insurer and the insurance company. Insurance collector files claims and makes sure insurance companies pay what they owe. During training a Insurance collector learns the laws that govern debt collecting, negotiation skills and protocols and procedures for organization.
