What are insurance agents? An insurance agent is an independent intermediary who either sells contracts or negotiates insurance for compensation on behalf of an insured client. Insurance agents are often called upon to represent any variety of clients and businesses and are employed by most major insurance companies. They work with their client to develop and carry out the insurance plan so that the client gets the best value for money.
One of the most popular types of insurance agents are brokers. Brokers bring clients and businesses together to make sure that each party is protected. They are usually employed by one specific company or many companies. Many brokers have specialized in certain fields such as commercial insurance agents, life insurance brokers, disability insurance brokers, or health insurance brokers. Each type of broker has a certain expertise, but all insurance agents have the ability to find the best deal for their clients.
There are two types of independent insurance agents typically represent businesses. Captive agents represent only one insurer. They do not act as reps for other insurers. Another type of captive agent is a full service broker who represents multiple insurers. They can choose to represent one company exclusively or they can represent multiple companies as an independent broker. The independent insurance agents typically work in conjunction with the larger insurer and are paid a commission on any policies sold.
All insurance companies pay commissions to their independent contractors. In most cases, commissions are based on the amount of money the agent spends to sell insurance to the insured. However, some companies offer higher commissions to agents who sell the most policies. While it’s possible to receive high commissions on policies sold by captive agents, most people will not receive the largest commissions.
Some brokers work solely on their own and are referred to as risk management agents. Most risk management agents work directly with insurance companies to reduce the risks associated with their clients. These agents are usually hired from smaller insurance companies. Many risk management agents spend years training in order to understand the most effective ways to lower the cost of insurance for their clients.
There are also independent brokers that work for insurance companies as affiliates. Affiliates work in much the same way as independent brokers work with an insurance company. However, affiliates are not allowed to sell policies themselves. Instead, they are responsible for finding and advising potential customers about the best policies for them. These agents may receive commissions for selling insurance products to customers.
Many brokers may work through network marketing companies. Networks allow brokers to reach a large audience through their marketing efforts. However, most brokers obtain their commissions by referring clients to the company for a fee. This process can be lucrative for brokers since most commissions are based on the number of sales made through the broker’s referral. However, these agents must maintain good relationships with their network companies in order to receive commissions for every sale made.
Many insurance agents work as brokers for many different companies at the same time. This practice is called “broker stacking.” Because an insurance agent may represent one company for a long period of time, they may receive bonus or commission increases for working with a number of different companies. Insurance companies are able to reduce the risk of hiring these agents by paying a lower commission, or decreasing the number of companies that an agent represents.
Some insurance agents act as intermediaries between the customer and the insurer. In this role, the insurance agent contacts a potential customer, provides information about the product or service and asks for a quote. If the customer chooses to purchase insurance, the agent forwards the quote to the insurer. The insurance broker then receives a commission for the work he did to find and contact the customer. In short, the insurance broker acts as a go-between for the insurance company and the potential customer.
It’s not uncommon to see brokers using intermediaries to find potential customers. Insurance brokers can obtain licenses from state licensing boards. In addition, insurance agents can be licensed by the National Association of Insurance Commissioners. In general, however, insurance brokers are independent contractors who receive no compensation for their work. Their fees are paid, in most instances, by the insurers they represent.
Insurance agents can be required to provide binding coverage to the insurer. Binding coverage is a formal written agreement between the agent and the insurer that dictate how the insurer will pay the agent if the customer cannot pay the premium on the insurance policy. An agent may also be required to obtain uninsured/underinsured motorist coverage from the same insurer as the insured. To learn more about the duties, an insurance agent may have to perform, contact your state regulatory agency.