Hello there, welcome to this informative article where we detail who these two major players in the insurance industry are.
You are probably aiming at a career in the insurance industry and it is important that you know the difference between these two and make your choice accordingly.
You must be the best because policyholders count on the extensive knowledge you possess to guide them on the best insurance coverage for their needs.
In this article on Insurance Producer vs Agent, we will cover the following:
Insurance producers and agents play a major role in the insurance industry.
However, the terms can get confusing because most people are not certain what the difference between these two is.
Most of them wonder what it is that insurance agents do that insurance producers do not?
Here we go!
Who Is An Insurance Producer?
So what is an insurance producer?
As the name suggests, a producer in insurance has the responsibility of generating sales for insurance companies.
Most people will use the term to mean any salesperson in the insurance industry, including agents who offer insurance coverage options to clients.
But, not every licensed insurance professional is an insurance producer because not all of them are acting in a sales capacity.
Insurance producers are therefore anyone who is involved in the sales of insurance products from different insurance providers.
Insurance producers have to acquire state licensing in the state where they will conduct their insurance sales activities.
Most states will require producers to pass a certain exam in their resident state and meet the set ethical and continuing education requirements.
These requirements are different in every state.
Still, producers could be insurance brokers or agents, but they will require different licensing, which of course, depends on the state.
Being an insurance producer is a rewarding experience, and it is a career with exceptional growth potential.
Becoming an insurance producer is also a great way to get started in a finance career.
What Insurance Producers Do
So what does an insurance producer do?
Insurance producers are licensed and responsible for selling life, property, health insurance, and other kinds of insurance made available by insurance companies.
An insurance producer can work for a single insurance company or multiple insurance carriers.
As an insurance producer, you will find new clients and maintain working relationships with the existing clients.
Insurance producers are the reliable first point of contact when an insurance client has needs such as filing claims, increasing coverage, obtaining property insurance, or education insurance for their newborn child.
Most of them work as independent agents running small businesses or under insurance agencies.
Here are other responsibilities that an insurance producer has.
- The calculation of premiums and establishing or confirming payment methods.
- Insurance claims monitoring and aiding the clients in settling them.
- Ensuring that all policy requirements are met.
- Customizing insurance programs to meet the clients needs.
- Conducting property inspection, noting its condition and determining its insurance risk.
- Becoming an intermediary between the client and the insurance provider.
You might say that there is not much difference with the insurance agent, but why don’t we take a look at what an insurance agent does?
Who Is An Insurance Agent?
An insurance agent is a licensed salesperson who sells insurance for one insurance company.
This kind of seller is also called a captive agent, which means the person can only sell insurance for one insurance company.
They conduct dealings pertaining to insurance policies on behalf of an insurance company.
You might wonder, how is an insurance agent different from a broker or an insurance producer?
Well, the main difference is that the insurance agents work for the insurance company they are selling the products for.
Most agents will specialize in one kind of insurance such as casualty insurance, health insurance, property insurance, or disability insurance.
But most of them tend to diversify their means of earning by delving into the other types of insurance.
However, they will only stick with one insurance company even as they diversify the products they are selling.
Another thing that is distinct about the insurance agent is that they receive a salary that is paid by the insurance company they sell for.
They might receive a salary-based commission or bonus.
This is why the insurance agent will put all their energies into selling all the insurance company’s products.
For example, they will sell long-term life insurance to a client then offer them a critical illness policy too.
There are insurance companies who will only work exclusively with agents, and this is why their products will never appear among the products peddled by the brokers and producers.
What Insurance Agents Do?
There are responsibilities that insurance agents carry out as they work for the insurance companies.
They do pretty much what insurance producers do, but now they represent the company in the dealings with the client and only sell insurance products from one company.
Here are their responsibilities:
- They come up with strategies to promote the different types of insurance
- They help evaluate the needs of an individual customer or business and propose insurance plans that will meet those needs.
- They create and nurture relationships with clients and grow existing relationships to create this solid base of clients.
How To Be An Insurance Producer Or Agent
You have to begin somewhere if you want to become either a licensed insurance agent or producer.
Here are the steps.
Earn That Degree
A college education is very important, and it is vital if you intend to expand your knowledge into areas such as risk management and other fields of business and finance.
Such knowledge is a great asset to insurance professionals.
So you can choose whether you want to pursue a bachelor’s degree or an associate degree program.
Choose A Specialty
Insurance salespeople have options of selling different types of insurance such as casualty, property, disability, and personal lines of insurance.
Such options are referred to as the lines of authority in the insurance industry.
Remember, you will receive licensure for the lines of authority that you choose. So know the types of insurance you want to sell.
Meet All The Pre-licensure Requirements
The requirements are different with every state and are an important step towards becoming a licensed insurance agent or producer.
Always check with the department of insurance in your state for the exact prelicensing requirements to ensure that you don’t miss any requirements.
You Must Pass The Licensing Exam
To become licensed and sell insurance products, you must pass the licensing exam.
The National Insurance Producer Registry also features the list of licensing requirements specific to states and the associated fees and other vital information about the licensing process.
Make The Necessary Applications
If you have met all the requirements, you only need to begin applying for employment at insurance brokerages. These agencies could be the small local agencies or the regional offices of reputable insurance carriers.
Qualities Of A Great Insurance Producer And Insurance Agent
The insurance career path means job independence, great flexibility, and high earning potential.
But, it also means a highly stressful environment with sometimes little or no pay. It is one of the industries with high quit rates.
Therefore to be a successful producer or agent and not one of the quitters, you must have certain qualities that will make you outstanding.
They might be two different insurance professions but the qualities needed are similar.
Here are the qualities that will make you an icon in the insurance industry, whether you are an insurance producer or an insurance agent.
- Ability To Put A Clients Needs First
As an agent, your main aim shouldn’t be just earning that commission without regard for client satisfaction.
Doing that will leave a wake of dissatisfied clients, and an increasing number of those means that you might be out of business soon.
Always listen first to what your clients and prospects want, earn their trust, and even if the product you are selling them means a lower commission for you, just go ahead and make your client happy.
You will not only retain that customer, but the customer is likely to refer you to other customers.
- Great Customer Service Skills
This is another thing you can’t escape from as an insurance agent.
Your customers must be able to reach you when they need to.
You must also offer reassurances, satisfying clarifications, and responses to inquiries when required to.
You must be available for your clients even after they have purchased their policies and have questions.
You must always deliver, and when you are not able to, always have a solid reason why.
- Emotional Intelligence
This is the special ability to listen and empathize with your clients, and it is not everyone who can do this.
This skill allows you to figure out what your client needs.
You must be tactful in the methods you choose to enlighten your client about the financial decisions they need to make.
This is especially when the client is dead-set on making a decision that you can clearly see is wrong.
- Great Energy
This is an important trait.
You must always appear excited and enthusiastic, especially every time you meet a client.
Looking worn-down and dreary will work against you because clients tend to notice such things, and that will greatly discourage them from buying any of the insurance products you are offering them.
This is a career that requires great persistence.
You must have the heart to handle rejection every time it comes and do it with a smile.
Even with many rejections, you must continue reaching out to clients because there will be a time when you have built a reputation and landed several clients; the yeses will be many then.
But until that time, you must positively deal with rejection of your offers and keep offering them to more people.
You must avoid deception at all costs.
Dishonestly can cost you business and land you behind bars in some instances.
Tell your client the truth always, and even if it costs you the policy, it is important that the client knows everything and no unpleasant surprises come up, especially in insurance products related to health care.
Honesty will earn you more clients and grow your business.
- Extensive Product Knowledge
You can’t be in the business if you lack knowledge of the products you are selling.
You must be in a position to give a comprehensive selection of insurance products and services to your clients, befitting their needs.
You must know more than how to sell policies.
Understand the tax and legal aspects of the insurance products you are selling and how they will solve your client’s needs.
If you need to undergo training as a certified financial planner to gain the best knowledge to serve your customers best, then go ahead.
Having extensive knowledge will make clients trust you and bring you more business.
Conclusion on Insurance Producer vs Agent
The term insurance provider is wide and includes both insurance agents solely dealing on behalf of insurance carriers and the insurance brokers who deal on behalf of the clients.
By now you understand who is the producer in insurance.
Most state insurance departments regulate insurance producers and insurance agents similarly when it comes to awarding the insurance license.
Producer licensing is the same as agent licensing, and work roles are also the same as we have seen.
However, with increased robo-advising and self-service options offering clients direct access to carriers, many insurance agents see the need to expand and take on a producer-like way of doing things.
So, it is safe to say that being an insurance producer has more earning potential than being an insurance agent.
That is the one main advantage.
Therefore, when it comes to insurance agent vs producer, the producer becomes the better career option because of the great earning potential.