What distinguishes an insurance agent from a broker?

The distinction between an insurance agent and a broker primarily lies in whom they represent in the insurance transaction. An insurance agent acts as a representative of one or more insurance companies, selling their products and services, and is typically tied to those insurers by a contractual obligation. This means that the agent’s primary role is to promote and sell policies on behalf of the insurer, facilitating the purchase of insurance coverage for clients.

On the other hand, a broker operates independently and represents the interests of the client, or insured. Brokers have the flexibility to offer products from multiple insurance companies, which allows them to seek the best coverage options that align with their clients' needs. Their role is to shop the market, comparing different policies and options to find the most suitable insurance solutions for their clients, rather than being tied to any single insurer.

Recognizing this fundamental difference in representation is crucial in understanding the insurance distribution landscape, as it influences the types of services provided to clients and the nature of the client-agent or client-broker relationship.