What Is An Insurance Broker?
An insurance broker is a liaison between consumers and insurance companies. They typically do not underwrite policies themselves, but act as the intermediary between those purchasing insurance and the companies or managing agents who have the resources and the authority to price, underwrite and ultimately issue policies.
Insurance Broker Authority
While not able to actually control pricing or policy issuance, an insurance broker is often given limited authority to bind policies with the insurance companies they represent, essentially promising to their clients that an insurance company will issue a policy with a specified effective date. This allows an insurance broker the freedom to tell his client they are covered first, without having to wait for an actual policy to arrive in the mail.
Types of Insurance Brokers
Insurance brokers fill many roles. Here’s an overview of the two major categories: Life & Health and Property & Casualty Insurance Brokers.
Life & Health Insurance Broker — These insurance professionals can manage both personal and group Life & Health products. Those who broker group health insurance often handle group benefits like 401(k) plans, as well. Below is a list of common products sold by Life & Health insurance brokers:
- term life insurance
- whole life insurance
- health insurance (HMO, PPO, etc.)
- dental insurance
- vision insurance
- short term disability
- long term disability
Property & Casualty Insurance Broker — A P&C insurance broker handles a wide variety of insurance products for clients. The two main categories of this genre are Personal and Commercial insurance. Products sold and managed by property and casualty brokers include everything from Homeowners and Auto insurance to General Liability and Workers Compensation policies.
Insurance Broker Specialties
For every Property & Casualty product, there is an insurance broker specialty. While many brokers remain generalists, able to write a host of similar coverages for their clients, some choose to specialize in select products. What follows is a brief list of some common and not so common specialist insurance broker roles.
- Car Insurance Broker
- Van Insurance Broker
- Motorcycle Insurance Broker
- Mobile Home Insurance Broker
- Motor Insurance Broker
- Home Insurance Broker
- General Liability Insurance Broker
- Building Insurance Broker
- Landlord Insurance Broker
- Cargo Insurance Broker
- Travel Insurance Broker
- Pet Insurance Broker
- Cell Phone Insurance Broker
Home & Car Insurance Broker
By far, one of the most prevalent roles in the insurance industry is the home and car insurance broker. Because so many people own or rent homes and apartments, and a vast majority of those have cars, there is a huge marketplace for home and car insurance brokers to service. With direct insurance writers like Progressive and Geico spending millions of dollars advertising to potential customers, you might wonder what the point is competing with them. But the one thing I hear over and over again from clients is that they are so glad to speak to someone who knows the town they live in, and it’s always nice to get the same person on the phone each time they call us. Independent home and car insurance brokers actually have a large advantage over national direct writers in being able to deliver consistent and personalized customer service.
Finding An Insurance Broker
Consumers today have the choice of working through an online insurance broker or a local broker like an independent insurance agent. However, an online insurance broker is often just an extension of a local agency outfit. If this is your preference as an insurance buyer, simply go online and search for a resource rich insurance broker website. Any good online insurance broker will offer more free information about the products they sell than their competitors. That’s because they realize their true value lies in the outstanding customer service they’ll provide you before, during and especially after the sale.
Insurance Broker Jobs
If you’ve ever considered becoming an insurance broker, there are many insurance broker jobs available. Since every state has mandatory requirements for certain types of insurance, like car insurance and workers compensation, there is no shortage of insurance broker positions from which to choose.
Job Hunting: A good place to start looking for one is online. Check your state’s Independent Insurance Agent Association website for job postings. Then search for local brokers and see if they have an “insurance broker careers” section that lists available positions. If you’re a member of LinkedIn, you’ll also have access to job listings that brokers post on their page. Search for them, and see what kind of insurance broker jobs you find.
Licensing: Whether you want to be a Florida health insurance broker or a property & casualty Oregon insurance broker, you’ll have to get licensed by your state’s insurance licensing division. Licensing classes typically last a week and are taught in a classroom setting. You’ll take an exam at the end of the week, and in some cases, be issued your insurance license within a day or so after passing the test.
Broker Contract: Then, after you’ve passed your licensing exam and landed a job, your new employer will ask you to sign an insurance broker contract. This is sometimes called a “non-compete” or “no-raid” agreement, which states that, if you leave their employment for any reason, you won’t solicit any of their accounts, even the one’s you sold, for a certain period of time after you leave. In most states, this is 1 — 2 years.
Starting Your Own Brokerage: Of course, if you’ve got the entrepreneurial drive, you can always strike out on your own and start your own insurance brokerage firm or independent insurance agency. Just be sure you develop a well thought out insurance broker business plan. There are many things to consider, like location, physical space, hiring employees, and landing carrier contracts to name a few. If your business plan doesn’t address these things, you’d better get some advice from a seasoned professional before starting an independent insurance agency or brokerage firm.
By now, you should have a better idea about what an insurance broker does. Whether you’re looking for a quote from an insurance broker or you’d just like to learn more about how we operate, fee free to give us a call at 888-971-6304, or fill out the form below and we’ll contact you within one business day. Either way, we look forward to serving you.