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Insurance Agents, Producers and Brokers: What’s the Difference?

Insurance agents, insurance producers, and insurance brokers all play important roles in making the insurance industry work. Many people, however, aren’t sure exactly what the difference between them is. What do insurance agents do that insurance brokers don’t? What’s the role of brokers as compared to producers? For everyone who’s ever been confused about what these terms mean, we’ve put together a breakdown of what each of these three titles mean within the insurance industry.

What Is an Insurance Agent?

A licensed insurance agent, or producer, is someone who sells insurance on behalf of an insurance company. Insurance agents can either be “captive” agents (meaning the company they represent prohibits them from selling insurance from any other company) or independent agents (who represent more than one company, and are therefore able to sell insurance from multiple carriers). The most important distinction between an agent and a broker is that insurance agents work for the insurance companies; they sell products that the insurer is authorized to sell in their state.

In some states, insurance agents are officially called insurance producers. Despite the difference in names, the role they play is exactly the same. Whether someone is called an insurance producer or an insurance agent, it is their job to sell insurance coverage on behalf of an insurance company. Unlike the difference between insurance agents and insurance brokers, the difference between agent and producer is just using a different title for the same job.

Insurance Broker

What Is an Insurance Broker?

Insurance brokers are similar to independent agents, in that they offer insurance coverage from multiple carriers, but there is an important distinction between the two. Unlike insurance agents, brokers are not representatives hired by insurance carriers to represent them. Instead, brokers work on behalf of their clients (individual consumers). When a consumer hires an insurance broker, the broker will search through the many available plans and identify the one that best fits their customer’s needs.

What is an insurance agent

Why the Difference Matters

When most people think of an insurance agent, they’re thinking of an insurance producer. While the distinctions between agent, broker, and producer may seem trivial, understanding what makes them different can help consumers have an easier time working their way through the system and getting coverage.

Another important reason to know the difference is that, depending on the state, the licensing requirements for each job can be slightly different. Insurance licensing is regulated at the state level, and some states require brokers to go through a slightly different licensing process than agents. If you’re pursuing a career in the insurance field, it’s critical to understand the differences between a broker and an agent so that you can be sure to get the correct license for whichever position you are pursuing.

If you want to know more about insurance agents, brokers, and insurance licensing requirements, contact America’s Professor today to enroll in one of our online insurance test prep courses. Give us a call at 800-870-3130.

 

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Jaimee Crutcher
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Jaimee Crutcher

It ‘s really great to know. Thank you for sharing.

Danielle
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Danielle

Thanks for the breakdown. I have a better understanding now.

America's Professor - DCM
Admin

Glad we could help!

Julie
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Julie

If I want to sell health insurance as an independent, what type of license should I pursue?

America's Professor - DCM
Admin

Hello Julie, Typically you would want to get a Producer or Life license (whichever your state calls it) then find a company to work with. Some states allow you to only get a Health license but if that is not available you would need to get a Life and Health license (e.g., Texas). Good luck!

Mary
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Mary

Can one be both an insurance agent and an insurance broker at the same time, but serving different clients for each category/branch?

Mary

America's Professor - DCM
Admin

Hi Mary, Usually you pick one route to follow. It’s not recommended to do both. You would open yourself up to a lot of potential conflict of interest legal issues.

Brian
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Brian

What is the difference in an agents license and an adjusters license in P&C? Can an adjuster in Texas use their adjusters license to be an agent?

America's Professor - DCM
Admin

Hi Brian, Typically a Property and Casualty course with closely prepare you for Agent/Producer or Adjuster licensing exams. You then need to take the license exam for the specific job you what you want to do, selling as an Agent or being an Adjuster. Most adjusting companies will not allow you to hold both an Agent and Adjuster license as there are conflict of interest issues. So no, Adjusters can’t just switch and start selling insurance. Please give us a call if you have any other questions. Thanks!

Gloria Champion
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Gloria Champion

Thank you for this site. I am studying to take my Life Insurance License Exam. I have been studying from exam cram. But, this site has helped a lot also. Wish me luck!

America's Professor - DCM
Admin

Hello Gloria, Glad we could help! Good luck on your exam!

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[…] what is an insurance broker? An insurance agent is an employee of an insurance company. He or she is expected to understand the […]

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[…] A licensed insurance agent/producer is someone who sells insurance on behalf of an insurance company. An insurance broker, on the other hand, works on behalf of their clients rather than on behalf of insurance companies (read more about the differences between an insurance agent/producer and broker here). […]

jameson jean
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jameson jean

hello im getting confuse about a broker and an agent do agent need a broker to sell insurance

America's Professor - DCM
Admin

Hi Jameson, an Agent will be appointed by and an Insurer to sell their products. So the Agent gets paid a commission by the Insurer. A Broker will typically be working for the individual trying to purchase insurance and be paid by that person.


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