The biggest difference between insurance agents and insurance brokers is who they work for. An insurance agent works for one insurance company and is authorized to sell only that company’s insurance policies. They are required to offer what the company instructs them to offer, which gives them fewer options regarding what policies they can offer their clients. The insurance agent’s loyalty must be to the company they work for, and not to the client buying the policy.
An insurance broker, on the other hand, does not work with only one company. Most insurance brokers have business relationships with several different insurance companies and can therefore offer their clients the best possible deal regardless of where it comes from. This means that they are working for their client in ways that an insurance agent cannot do.
An insurance agent is paid somewhat differently than an insurance broker, as well. Both of them a primarily paid by commission – they earn a commission on every sale they make. The agent, however, works directly for the insurance company, which sometimes pays them wages on top of their commissions, often with benefits and pension plans. The insurance broker, however, is an independent agent, and as such doesn’t get a regular wage – they are fully dependent on commissions. They are also responsible for their own health insurance, pensions plan, and business expenses.
Both insurance agents and insurance brokers need to be licensed to practice and must meet whatever continuing education requirements there are in their state, but the insurance broker needs to know about more policies and offerings than the agent does, simply because the broker is able to sell a lot more products. The insurance agent, on the other hand, only needs to know about the products their company sells.