Insurance Brokers vs Agents: Key Differences Explained

Insurance brokers operate on behalf of the buyers and their interests, while insurance agents represent the insurance companies. As such, insurance agents help match a buyer to plans from the insurance companies they represent, while brokers can go the extra mile by helping buyers negotiate as well.

In today’s blog post, we will be going over the differences between insurance brokers and agents to help you understand their roles in helping you find the right health insurance plan.

What Does an Insurance Agent Do?

Insurance agents can sell and occasionally adjust coverage on behalf of one or more insurers in hopes of maximizing the insurer’s sales and profits. Insurance agents come in both captive and independent variations; the former represents one insurer, while the latter represents multiple insurers.

Certain agents can also bind coverage under specific circumstances, granting buyers coverage before the insurance company finishes processing their application and issuing policy documents. Agents also earn stable commissions from the insurers they’re contracted to.

What Does an Insurance Broker Do?

Insurance brokers, unlike agents, operate on behalf of the buyers directly, as opposed to operating on behalf of the insurance companies. This means insurance brokers will prioritize the buyers’ best interests in the event of conflicting interests.

Moreover, brokers can help come up with impartial recommendations based on your business’s unique insurance needs and possibly leverage their close partnerships with insurers in hopes of better premium negotiations or meeting specific conditions.

Similar to how insurance agents can represent one or more insurers, brokers can also operate differently.

For instance, smaller brokers can merely go over the best plans and match buyers with the plan that best fits their needs. Meanwhile, larger brokers can also offer value-added services such as claims assistance and renewal support, usually at no additional cost.

Furthermore, certain agents also specialize in certain products, such as group health insurance, for which they can also offer additional services depending on their expertise.

A comprehensive insurance broker will be especially beneficial to HR administrators, as the brokers will handle claims analysis or employee training and orientation. This will save HR administrators considerable time, allowing them to prioritize their own duties.

Is it Less Expensive to Buy from an Insurance Company?

Insurance companies can only sell their own respective insurance policies. When it comes to searching for insurance plans, buyers erroneously assume it is cheaper and less-time consuming than buying from an agent or broker since this is the most “direct” approach to securing insurance.

While true in some instances, this is often not the case. This is because plan research and comparisons without an agent or broker can prove tedious for business owners and HR teams, requiring considerably more time to understand each option to determine which one best matches your business.

Key Differences Between Buying Insurance Plans from Insurance Brokers, Insurance Agents, and Insurance Companies

Now that we’ve gone over buying insurance plans through a broker, agent, and an insurance company, let’s now summarize the key differences between the three options below.

Insurance Brokers

• Brokers act on behalf of the buyers, allowing them to offer additional client support such as plan comparisons or claims analysis and assistance.
• Brokers are experts in a wider range of policies and insurers.
• Brokers can also offer impartial recommendations for individual insurance needs.
• Larger brokers can also help buyers negotiate premiums and benefits.

Insurance Agents

• Agents represent one or more insurers.

• Some agents can bind coverage, granting buyers coverage even before the insurance company finishes processing applications and issuing documents.

Insurance Companies

• Potentially lower premiums.
• You feel like you’re more in control because you’re doing the research and review process independently.
• Without the assistance of a broker or agent, comparing and selecting plans might be more challenging.

What To Consider When Deciding Whether to Buy Insurance from an Agent, Broker, or Directly from the Company

When deciding whether you’d like to purchase an insurance plan directly from the company or through a second opinion from a broker, the insurance company’s representative in the form of an agent, the biggest factor to consider in making your decision is your budget and insurance needs.

Opting for either an agent or a broker may require additional service charges, which isn’t an issue if you choose to forgo the addition of agents and brokers in favor of purchasing insurance plans directly from the insurance company independently.

By opting to purchase the insurance plans directly from the company, you get more freedom in your research and selections. However, you will miss out on a second opinion.

Whether it’s through the company’s representative in the form of a broker or impartial advice from an agent, having at least one helping hand in your insurance plan comparison and selection process is worth considering.

Conclusion

In conclusion, insurance brokers and agents play very similar roles in your insurance plan selection process but with some differences. For instance, agents represent the insurers themselves and have the option of granting coverage early, while brokers can offer impartial plan recommendations.

On the other hand, if you opt to purchase directly from the insurance company, you may get more freedom and control in your research but you will miss out on a second opinion with recommendations.

Known as a leading international health insurance broker and employee benefits specialist, Pacific Prime has over 20 years of experience in both matching expats and locals to their health insurance plan of choice and offering employee benefits advice.

If you have any questions about health insurance plan selections or employee benefits solutions, please get in touch with us.