Both insurance brokers and insurance agents in Colorado Springs act as important links connecting insurers to policyholders. As insurers cannot reach each customer individually, agents and brokers take up a large part of the tasks involved. Policyholders often face a dilemma whether to route their policies through an agent or an insurance broker. While there are overlapping areas of work, insurance brokers and insurance agents do have a different mode of operation. However, customers do easily mix up the two. We explain the differences between insurance brokers and insurance agents:
Insurance Brokers deal With Many Insurers
Insurance brokers have professional links with a number of insurance companies and they can get quotes from these insurers without prejudice to the customer. However, a captive insurance agent is affiliated to a single insurance company and offers the insurance policies of that insurer only. This also means that brokers often have a wider range of insurance products to offer than insurance agents and they can offer a wide range of options for a single requirement. Many insurance companies also deal exclusively through brokers and agents and offer significant discounts compared to direct business. This is because the insurer saves on customer acquisition and administrative costs.
An Insurance Broker Represents the Customer
While an insurance broker represents the customer and works on his behalf, the agent is appointed by the insurance company. The scope of work for a broker is also wider when compared to that of a captive insurance agent. The broker can also analyze customer requirements and suggest strategies for risk management and reducing premium. The work of the agent is mostly administrative, such as collecting premium checks and assisting policyholders with the right documentation and procedure. The compensation of the broker for services rendered usually includes a fee paid by the customer along with a commission from the insurer, while an agent’s commission is paid by the insurer for the business he brings for them.
Licensing requirements are typically more stringent for an insurance broker as they act independently. Most states govern the selling of insurance, so insurance brokers and agents in Colorado Springs and elsewhere in the state must get licensed for selling different kinds of polices like property insurance, casualty insurance and general insurance. Both brokers and agents are bound by law to act responsibly towards policyholders. They also face strict compliance requirements and follow ethical codes of conduct in discharging their fiduciary duty.
Should You Choose an Insurance Broker or an Agent?
The choice of a broker or an agent for insurance needs depends on the requirements of the policyholder. If your needs are limited and you have a fair idea of the kind of premium you have to pay, you can choose an insurance agent for your coverage. However if you have a larger requirement and need comprehensive advice with a large outlay every year toward insurance, you can consult an insurance broker.
Diversified Commercial Insurers are leading independent insurance brokers in Colorado Springs and Castle Rock, CO specializing in commercial and personal insurance that suits the customer’s needs and budget. To know more about health insurance plans, visit Webmd.com.