Welcome to the comprehensive guide, ready to answer all your questions on the difference between an insurance agent vs broker.

Career Employer details out the different job descriptions of the two professionals, the advantages and disadvantages of each as well as how to become either, should you make a decision.

In this detailed insurance article, we cover the following items:

What does an insurance broker do?
What does an insurance agent do?
The Pros and Cons of insurance agents and brokers
Why use insurance agents vs brokers
Frequently Asked Questions

Curious as to what is the difference between an insurance agent and a broker? Keep on reading to find out.


If you have been in the market, you have probably heard of the terms’ agent’ and ‘broker .’ In most cases, the two phrases are used synonymously.

While both phrases describe professionals who work in the insurance industry, they are two job titles with conspicuous differences.

This article highlights the difference between broker and agent by describing each professional in detail.

The role of an insurance agent 

Also referred to as ‘captive agents,’ an insurance agent typically represents and works for one insurance company.

In some unique cases where an insurance company is a conglomerate of smaller ones, the captive agent will offer a client several coverage options from different insurance companies but technically under one umbrella company.

They are also responsible for processing paperwork, forms, and premium payments for their clients.

You can think of an insurance agent as a bridge, linking the insurance buyer to the company.

They break down the available insurance policies and contracts in the company.

How is an insurance agent broker compensated?

An insurance agent is under the employ of an insurance company.

Apart from receiving their monthly salary, they might receive sales commission from bringing in clients.

In addition, they might receive additional earnings referred to as ‘contingent commissions.’

Contingent commissions can be likened to a performance bonus in other professions or fields.

Pros and Cons of being an insurance agent 

Here are the benefits and disadvantages of being an insurance agent 

Pros of insurance agents

  • Potential income. Many consider being an insurance agent because of the high potential of making lots of money. Captive agents can receive both salaries and commissions from sales.
  • No fixed schedule. Insurance agents have flexible hours and, in some cases, work with no superiors.
  • As an insurance agent, you can start earning early and, in most cases, with no licensing required.

Cons of insurance agents

  • Build up network and client base. Commissions are based on insurance sales, and for you to get deals, you must build up a client base—no easy task.
  • Pressure. Insurance agents reveal that there are constantly under pressure to meet insurance sales targets. In addition, your earnings rely on the sales you get.

Is an insurance agent a broker?

In the next section, we detail what is a broker in insurance, how to become one, and how much they earn.

The role of an insurance broker

What are insurance brokers, or What is an insurance broker company, you may be wondering?

An insurance broker is a specialist in risk management and insurance.

From the description of an agent above, you can point out that the agent works for the insurance companies.

Insurance brokers work for and represent their clients by using their brokerage knowledge and experience to analyze your exact insurance needs and select the best insurance coverage in the current market.

In addition, to identify the best insurance policies and rates, the insurance broker will also place a unique combination of types of insurances to cover special projects, developments, or exceptional cases.

Because of their unique position, insurance brokers are not bound to a specific insurance company, allowing them to assist the insured party in handling claims.

Since they are working for you, the advice of an insurance broker leans in your favor.

You can rely on a broker to break down the heavy insurance jargon that the average person cannot understand, provide the best policy and insurance products, and safeguard the client’s small business, house, and health.

How to be an insurance broker?

If you have chosen to become an insurance broker, we first recommend reading up on the requirements listed in your State as they typically vary.

In addition, you can also check out the National Insurance Producer Registry to learn more.

You will identify that your State has several pre-licensing requirements that each potential candidate must meet from State law.

  • Required coursework that touches on insurance codes and ethics
  • Submission of your fingerprints. A background check will be run.
  • Take and pass the qualifying exam. From our research and experience, these exams cover the insurance practice, the different products available, and State Law.

To take the exam, there are certain monetary costs that you must meet; don’t be caught off guard.

To operate as an insurance company, you will need to procure an insurance broker bond.

The insurance broker bond serves as a hedge against any form of dishonesty or negligence on the insurer’s part as they sell insurance products.

How much do insurance brokers make?

Understanding how an insurance broker works and earns money can advise you on choosing the ideal career and securing your future.

Insurance brokers can make a living chief thoroughly in two ways: a brokerage fee or a commission.

State insurance law prescribes that brokers disclose their commission rates and other fees upfront.

According to the Balance, broker fees vary depending on the specific insurer or reinsurer in question.

Brokerage fees are a percentage of the total annual premium, ranging from 7% to 15%.

There might be some states that place a cap or fee restriction on the percentage of broker fees that an insurance broker can earn.

It is on the commission that brokers can make a better return.

Nerdwallet provides that the amount of commission will vary depending on the insurance company and the policy.

Brokers can earn up to 100% commission on the first year of specific insurance policies such as life insurance.

The commission percentage is significantly less for renewals than for the first year.

Who needs an insurance broker?

It should be clear that you don’t need the services of brokers in insurance to approach the providers.

Purchasing an insurance policy is a personal choice, and one can choose to go directly to a provider and sign up to pay premiums every month or year.

However, for small business owners, property owners, and individuals who have complex insurance needs, the services of a broker insurance professional could come in handy.

The services of brokers insurance are required in the following circumstances:

  • For an individual with several cars or property
  • For small business owners with a need for insurance for their business or enterprise
  • For those who want to understand the intricacies of an insurance policy, including the limits and exclusions
  • If you want to inquire from multiple insurers without burning time or energy
  • Want a personal service from someone who understands your insurance coverage needs and background

Pros and Cons of an insurance broker 

Wondering what the pros and cons of being an insurance broker are?


  • Flexibility. Insurance brokers work on their schedules and timings. If lucky, you can open up your own office and set your hours.
  • Help individuals secure their future. It is a satisfying feel to help a person protect their loved ones, businesses, or build financial security.
  • A good income. According to Glassdoor, the average mean for insurance brokers varies between $99,000 to $110,000 per annum.


  • Training and background check. As specified above, there are pre-licensing requirements that you must meet to become a broker.
  • Continuing education. As a requirement to maintain your license, you will be required to complete additional training.

Types of brokers

Let’s have a look at the different types of insurance brokers and their responsibilities:

Retail Brokers 

This type of broker works with insurance buyers, advising and helping them purchase an insurance plan that meets their needs.

They request policies from insurance companies directly.

However, in the case whereby the case is complex, they can rely on wholesale brokers.

Insurance Wholesale brokers 

As mentioned above, there are cases whereby an individual or business requires specialized insurance coverage.

Insurance wholesale brokers are the professionals to help. In most cases, they work with retail brokers than with clients.

Due to the client’s needs, an insurance wholesaler should have specialized knowledge and expertise on insurance to guarantee that the insured’s liability is entirely covered under the plan in place.

Surplus line brokers

Surplus line brokers act as go-betweens between excess and extra lines companies and insurance departments, and wholesale brokers.

Excess and Surplus lines insurance companies (E&S) offer insurance coverage for individuals or businesses with higher financial risk than what a typical company may be willing to cover.

For example, the typical insurance company would not be willing to go near an individual with a history of bad debt or losses or a company engaging in risky and dangerous ventures such as amusement parks.

Independent contractors

Also known as ‘independent agents, they are often confused with brokers, especially when considering the insurance brokers meaning.

It is easy to understand why, considering how insurance brokers and independent agents work for multiple insurance companies and earn a commission from insurance sales.

In addition, both insurance professionals earn more money when an individual, property, or business owner purchases more insurance coverage.

The difference can be detailed under the following points below:

  • Representation. Insurance brokers represent the buyer, while independent contractors represent the company.
  • Binding a policy. A broker can provide a person with temporary cover before the policy is issued; their colleague cannot say the same.  
  • The number of policies. Brokers sell a wide range of policies, while independent agents are limited to selling specific insurance policies under Law.

Why use an independent insurance agent vs insurance broker?

While both insurance professionals serve as intermediaries between insurance companies and the insured party, there are benefits for working with one over the other.

In this section, we seek to analyze specific elements and conclude the argument of insurance broker vs agent.

Variety and products

Insurance brokers offer a variety of insurance products and services, allowing the insured party to choose a product that meets their needs.

A broker for insurance provides details on insurance and financial products available, guiding the client on the best available product for their insurance needs.

Agents in insurance only offer you the services and products availed by the employer company.

An agent for insurance is limited by the number of insurance products the employer company provides.

Their insurance sales are limited to one of the general types of insurance, whether life insurance, property insurance, and so on.

While they may seek to offer casualty insurance or property insurance that meets their client’s needs, their hands are tied by the fiduciary relationship with their employer.

Quality of service

In most cases, a brokerage company or agent sells policies for larger companies.

The service offered is more personalized as the brokers can hear your concerns and offer support accordingly.

In addition, by the insurance broker definition, the broker is mandated to provide complete information on the business insurance, life insurance, or any form of insurance they are selling.

Key differences in the contractual agreements of the policies are also detailed out.

By the insurance agent definition, one can deduce that the agent’s relationship leans more towards the employer company.

While they might offer you a breakdown of the terms of the policy and ensure you get the entire coverage sum, it is the responsibility of the insured party to select a policy that meets their insurance needs.

Due to the quality of service, some people feel more inclined to choose insurance brokers.

From our understanding and our research, insurance brokerage firms are preferred. A broker in insurance offers clients complete information on the various insurance plans in the market, allowing the client to make an informed choice.

Policyholders are confident of the best coverage, the best price, and that the insurance plan meets their needs by choosing insurance brokers over other types of insurance agents.  


The difference between agent and broker should be clear by now from the information above.

From our research, statistics reveal an increase in the need for insurance coverage as individuals and businesses seek to secure their future.

Compensation is only bound to increase, making the career path as an insurance agent or broker lucrative.

Frequently Asked Questions


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